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The big build: How a rise in renovations may affect property insurance

  • Spending more time at home may have led to reduced loss frequency across several major categories, according to Verisk data
  • Verisk data shows that homeowners significantly increased their home remodeling and maintenance activities at the height of the pandemic
  • High prices for materials are likely to continue, as remodeling and renovation activity continue to hold steady
  • New pools, trampolines, and other additions could create new liability exposures

The stay-at-home trends that emerged during COVID-19 continue to evolve. Some employers are offering flexibility for remote work even after the pandemic. Many homeowners are enjoying the benefits of home construction and renovation projects they completed over the past year. And all of this sustained time in remodeled homes is creating new questions for homeowners insurers to consider.

More time at home, fewer claims

People spending more time at home seemed to ultimately help many insurers, as loss frequency declined in 2020 year over year across several categories.

Focus On Portfolio Profitability And Insurance To Value

Data shows that spending time at home helped to reduce claims and limit overall insurer losses. For example, as people worked from home and stayed home more often, they may have deterred thefts. Additionally, owners at home were more likely to spot issues with plumbing or other hazards before they resulted in damage.

Homeowners liability and med pay loss frequency showed declines due to social distancing. Although people were spending more time at home, they were less likely to entertain people, leading to fewer potential injuries. The second quarter of 2020 saw the most significant impact from the COVID-19 pandemic with loss frequency nearing a 20 percent decline for liability, which contributed most to the year over year average. As stated above, by the fourth quarter of 2020, these numbers increased and were easing back to the rebound stage. Homeowners liability and med pay have the most potential to increase this year as people entertain at home more frequently.

Home improvements continue to soar

Maintenance and remodeling activity, along with spending, grew steadily in May 2020 and continued through 2021. Maintenance volume increased 10.2 percent year over year between June 2020 to 2021, and spending increased by nearly 29.3 percent. Meanwhile, remodel volume, a subset of maintenance that includes renovations, additions, and alterations, increased by 12.3 percent between June 2020 and 2021, with spending on the projects increasing by nearly 31 percent.1

June’s numbers reflect an ongoing trend we've seen throughout the past year. These numbers follow May’s peak, with maintenance volume increased 30.5 percent, and spending increased 48.9 percent compared to 2020. During the same period, remodel volume increased 29.1 percent and spending increased 40.9 percent.2

Maintenance and remodel spending remain elevated in large part due to the price of lumber. Between July 2020 and July 2021, reconstruction costs, including materials and retail labor, rose 16.7 percent. Driving the continued overall increase was a sharp rise in lumber costs, which rose 162.7%.3 This jump followed an 84.7% increase in the prior reporting period. The lumber costs jumped as the market faced high demand from increased building activity, supply shortages driven by pandemic-related shutdowns earlier in the year, and reduced production.

The significant changes to many homes during the pandemic could create challenges down the road for many policyholders, who may not have the coverage they need, and many insurers, who might not be charging appropriate premiums.

Fun in the sun

When the pandemic hit, homeowners tried bringing the fun to their backyard, and continued to build over the past year and half. As part of the remodeling and maintenance activity, the number of pool permits nationally increased by nearly 57 percent year over year in the first five months of 2020 and 2021. To break this down further, approximately 24,725 permits were issued in the first five months of 2020 (with 75,847 permits issued throughout the year), and 39,027 issued between January and May 2021. Although there was a minor dip in April 2020, we see pool construction coming back in full force, even reaching a peak just one year later in April 2021. This is also a tremendous uptick, compared to the margin increase in previous years – 2.6 percent in 2018 and 3.1 percent in 2019.

Focus On Portfolio Profitability And Insurance To Value

While the overall trend for the winter months may have shown a slight dip, specific states saw exceptionally high increases in pool construction. California, Florida, and Texas, to name a few, saw heightened pool building activity from the end of 2020 into the beginning of 2021. This may have resulted from generally better weather and homeowners trying to get ahead of potentially prolonged lockdowns, and ahead of the summer heat.

In addition to pools, Verisk's permit data also shows an increase in permits for other structures that are typically included under Coverage B of a policy, where homeowners may add structures on the property beyond the home, including fences, detached garages, and pool houses.

Focus On Portfolio Profitability And Insurance To Value

In looking at the data, we see pool houses/guesthouses as one primary source of growth, especially as compared to earlier years of building. Patio decks, gazebos, screened enclosures, outdoor kitchens, and retaining walls also saw some peaks in activity from 2020 and into 2021. And even after all of these home improvements, presumably, homeowners will likely spend more time enjoying these investments.

New housing volume and sales

Single-family housing authorizations increased 20.95%, year over year, with the trailing three-month outlook (April to June 2021) up 25.88%. However, single-family housing authorizations decreased, month over month, for the third consecutive month, down 2.99%.

Many of these new homeowners are first-time buyers, providing an opportunity for new, long-term clients. With the low cost of borrowing and pandemic-inspired moves to the suburbs from cities, home insurance shopping has skyrocketed.4

Questions to consider at renewal

With the increase in property change events, renovations, and additions, these changing risk factors are raising important questions for insurers to consider at renewal.

  • Do you know if your insured properties have undergone new renovations, remodeling, or maintenance activity during the pandemic?
  • With fluctuating costs of labor and materials, how do you determine if the replacement costs for your insured properties have changed?
  • With many homeowners beginning to entertain again, do your policyholders with new pools or other new amenities have the coverage they need?

To help address these challenges, many insurers are turning to data and analytics. With tools to help identify replacement cost estimates and change detection, you can be better positioned to maintain insurance to value throughout a policy’s lifespan and obtain a broader view of property risk.

For more insights on homeowners renewal strategies, download Verisk’s white paper, Focus on Portfolio Profitability and Insurance to Value.

James Roche

James Roche is vice president of property product management at ISO. He can be reached at

Raul Retian

Raul Retian is senior director of ISO Personal Lines Core Products. He can be reached at

Barbara Gipson

Barbara Gipson is senior director of personal property product management at Verisk. She can be reached at

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  1. BuildFax, May 2021 Housing Health Report, Verisk Analytics, June July 2021,, accessed June July 27, 2021.
  2. BuildFax, May 2021 Housing Health Report, Verisk Analytics,, accessed July 27, 2021.
  3. 360Value, Q2 2021 Quarterly Cost Update, Verisk Analytics, July 2021,, accessed July 27, 2021.
  4. Jornaya, “Consumer Behavior Insider, January 2021 Digital Shopping Activity,” Verisk Analytics, January 2021,, accessed June 23, 2021.

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