The Hanover's 2023 Home Renovation Report
The Hanover Insurance Group commissioned The Harris Poll to conduct its 2023 Home Renovation Report. The results found that rising inflation combined with elevated housing prices and higher costs for labor and materials had a large impact on homeowner decisions. Higher prices and soaring interest rates slowed home purchases. Even with higher costs, however, there are still a significant percentage of home updates being made. In fact, households with an income of $100K+ are more likely to be planning larger-scale renovations. One-third of those who made major renovations did not know that they need to inform their insurance agent. These finding create unique opportunities for agents to add value to their customer relationships. These trends are expected to continue.
Key findings
69%
of respondents looking to purchase a home in 2022 were impacted by higher home prices and interest rates.
28%
of the respondents looking to purchase a home in 2022 have had to stay in their current living situation longer than expected.
9%
of respondents with an income over $100k opted to rent instead of buy a home, compared to 21% of respondents with an income under $100k that were planning to purchase a home.
What this means for agents:
Fewer home transactions generate fewer leads for independent agents. Agents should diversify their lead sources to minimize the negative impacts of a slower housing market. Targeting higher-value home leads, which appear less impacted by home market trends, are also an opportunity for agents.
61%
of U.S. homeowners are planning renovations to their homes in 2023 with one in four (25%) planning major renovations.
41%
of U.S. homeowners that are planning renovations in the next year plan to spend over $50k and more than half of those respondents have a household income over $100k.
Millennials
Homeowners aged 23-41 were most impacted by the housing market, and are more likely to make renovations in the next 12 months.
What this means for agents:
When renovations are made, it changes the value of the home – including the cost to rebuild it in case of a loss. With homeowners still planning large amounts of renovations, the chances of a customer needing a coverage update continue to be high. Agents should incorporate proactive outreach into their strategy to help uncover renovations and keep coverage updated.
34%
of U.S. homeowners planning major renovations in the next year do not plan to or do not know they need to tell their insurance company/agent about the changes made to their home.
This is an 8% increase from last year.
What this means for agents:
Independent agents should regularly educate customers on when to contact them, such as for life events like moving, buying a car, or making renovations. This can be done through digital channels, such as social media or email, as well as during customer conversations. Proactive outreach throughout the year also results in powerful conversations that give customers peace of mind that their agents are continuously looking for ways to protect investments and add value to the relationship.
“With homeowners staying in their homes longer due to real estate market conditions, we are seeing more renovations, which increase home values and serve as conversation starters for insurance agents and customers. These trends should prompt agents to talk with their customers to ensure their homeowners’ policies reflect the true value of their home after a renovation, and that their policies protect the investments they have made to their home. These conversations can help create a strong customer experience that reminds customers of the value their agent provides."
- Dick Lavey, president of Hanover Agency Markets
Considerations for homeowners
- When homeowners make improvements, but fail to notify their insurance agent, they boost the home's value but could render their home insurance policy inadequate and open themselves up to uninsured losses.
- Contacting their independent agent after any major home renovations is critical for homeowners to ensure they are properly insured for the true value of the home.
- An independent agent can help determine the necessary policy to cover damage to a home's structure. This policy must also cover the cost of rebuilding a home at current construction costs.
- Often when renovations are done on a home, it requires the “Coverage A” amount listed on the insurance policy to be updated. An independent agent can help determine whether or not this needs to be updated based on the type of renovation.
- Independent agents will also be able to discuss if an umbrella policy is necessary based on home renovations.
As these trends continue, it will be critical for homeowners to work closely with their independent insurance agent on all renovations.
For example
If a homeowner added space to their property for a home office without discussing coverage needs with their agent, the home's value would be based on an outdated assessment.
They do not know the true value of the home. If an accident were to occur and a claim was filed to recoup the loss on the updated space, the insurance company may not be able to fully reimburse the claim based on the coverage limits that were purchased.
Survey method
This survey was conducted online within the United States by The Harris Poll on behalf of Hanover Insurance from November 10-14, 2022 among 2,064 U.S. adults ages 18+ among whom 1,444 are homeowners. The sampling precision of Harris online polls is measured by using a Bayesian credible interval. For this study, the sample data is accurate to within +/- 2.8 percentage points using a 95% confidence level. For complete survey methodology, including weighting variables and subgroup sample sizes, please contact Kyle Tildsley at ktildsley@hanover.com.