3 Biggest Risks in Home Renovation – Before Construction Begins

Written By Charlotte Insurance on December 1, 2014. It has 0 comments.

There are plenty of risks associated with a home renovation, especially construction on custom homes or projects that are detailed and complex. Understanding the risks and how to mitigate them prior to the start of construction will save time and money for homeowners.

The three biggest risks pre-construction for a home renovation are selecting a contractor, formalizing the contract, and making sure all parties are properly covered by insurance.


Only 27 states require contractors to carry a license in order to legally work in the state. Finding a contractor that is reputable and will get the job done can be the most difficult task in a home renovation. Homeowners working with an architect may have an advantage as a good architect should be able to recommend several contractors for owners to choose from. Recommendations can also come from Realtors, family, and friends who have successfully worked with contractors in the past.

Contractors must be thoroughly vetted. Asking specific questions about finances, complaints, and previous projects can eliminate a contractor or add them to the short-list for bidding. Any hesitation or refusal to supply information is a red flag and should be a cause for concern.


Once the arduous process of selecting a contractor has been completed, the next risk comes in the form of the contract. Many contractors will use a standard template for their contract. Homeowners must make sure that the contract is tailored to the specifics of the home renovation. Every aspect of the job must be included, as well as language guaranteeing that the safety of everyone on the job site is the responsibility of the contractor.


To make sure the homeowner and the home renovation are properly insured, the homeowner’s insurance agent should be consulted during the planning of the project as well as the selection of the contractor. They will work to make sure any problem with the job doesn’t affect the homeowner but lands on the shoulders of the contractors and subcontractors.

The agent will help to make sure that the homeowner is named as additionally insured on the contractor’s policy. They will also look for adequate Workers Compensation insurance and Commercial General Liability insurance for all contractors and subcontractors. The risk to homeowners is that without adequate insurance coverage and specific language in the policy and contract, they may be forced to pay for medical care, damages, and other costs that can be incurred during a home renovation.

Homeowners need to understand the risks of home renovations prior to the start of construction. Taking steps to minimize the risks saves money and time, as well as minimizing stress.

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