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Ask the Home Insurance Expert

An extensive remodeling project was just completed on my home. The project included significant upgrades to the kitchen and bathrooms as well as the addition of a bedroom. Will these improvements automatically be covered by my home insurance policy?

Don't conveniently forget to tell your insurance agent about home improvements just to prevent an increase in your home insurance premium. The outcome could be anything but convenient if you later suffer a loss and find that you don't have adequate coverage.

Your home insurance policy is based on the information you provide the insurance company, including square footage and features. You should be insured for as much as it would cost to rebuild the home. Obviously it would cost more to rebuild a larger home that includes upgraded cabinets, flooring, countertops and other features than it would to rebuild a smaller, more-modest home.

If you fail to tell your insurance company about the remodeling project, you will end up being underinsured. Too often after disasters, homeowners find they didn't have enough coverage to replace their homes. Not only must they deal with the trauma and chaos of losing a home, they have to figure out how to make do with less because their home insurance doesn't cover the full cost to rebuild.

Honesty is the best policy when it comes to insurance. Be open with your insurance agent and ask questions about anything you don't understand.

This is also a good time to complete a home inventory of all your belongings if you haven't already done so. The Insurance Information Institute provides free software and instructions for compiling an inventory at KnowYourStuff.org.

Having good records helps make the claims process go smoothly if you suffer a loss, and it helps determine whether you need to buy additional coverage. Standard home insurance, for instance, has coverage limits on certain valuable items, such as fine art, jewelry, rare coins and antiques. You can buy additional coverage for these items by purchasing an endorsement on the policy or a "floater" policy.

For more, see Next time I'll do it differently: Insurance regrets after disasters.

Last updated: Oct. 11, 2011