How to Review Contracts and Insurance for Your Whole-Home Remodel
A whole-home remodel is one of the largest financial commitments you'll make. The contract and insurance framework you establish now protects your investment, defines expectations, and provides recourse if things go wrong. Don't skip this step—it's your safety net.
Quick Summary
Time needed
4-8 hours of review
Difficulty
Moderate (legal complexity)
Cost
$500-$1,500 for attorney review
Why Contracts and Insurance Matter
Horror stories about remodeling projects usually involve one of two things: unclear contracts or inadequate insurance. When expectations aren't documented or someone gets hurt without proper coverage, projects go from dream renovations to financial nightmares.
For a project costing $150,000 to $500,000 or more, spending a few thousand dollars on proper legal review and insurance verification is the smartest investment you'll make. It's not about distrust—it's about clarity.
The Cost of Getting It Wrong
- • Disputes over what's "included" can add $20,000-$50,000+ to your project
- • Worker injury without proper insurance could make YOU liable for medical bills
- • Contractor abandonment with upfront payment = losing tens of thousands
- • Fire or damage during construction without proper coverage = catastrophic loss
- Defines scope precisely: Contracts document exactly what work will be done, preventing scope disputes.
- Establishes payment protection: Proper payment schedules ensure you never pay for work not yet completed.
- Provides legal recourse: A solid contract gives you standing to enforce expectations or seek remedies.
- Covers liability exposure: Proper insurance protects you if workers are injured or property is damaged.
- Sets change order process: Defines how modifications are handled, preventing surprise charges.
Essential Contract Components
A proper remodeling contract should be comprehensive—typically 15-30+ pages for a whole-home project. Here's what every section should include.
Scope of Work
This is the heart of your contract—every detail of what will be done. Vague language here causes disputes later.
What to Include:
- • Detailed description of all work by room and area
- • Reference to architectural plans (dated version)
- • Specifications for all materials (brand, model, color)
- • What's explicitly excluded from scope
- • Allowances for items not yet selected (with specific dollar amounts)
- • Who provides what (e.g., owner provides appliances)
- • Demolition scope and debris removal
- • Site preparation and protection
Payment Schedule
Payment timing is crucial. You should never be significantly ahead of completed work.
Recommended Payment Structure:
Timeline and Schedule
Establish clear expectations for project duration with milestone dates.
Schedule Elements:
- • Projected start date
- • Major milestone dates (demo, rough-in, drywall, etc.)
- • Substantial completion date
- • Final completion date
- • Definition of what constitutes completion
- • Provisions for weather delays
- • Provisions for permitting delays
- • Liquidated damages for excessive delays (optional but protective)
Change Order Process
Changes WILL happen. The process for handling them should be crystal clear.
Change Order Requirements:
- • All changes must be in writing before work begins
- • Itemized cost breakdown (labor and materials)
- • Impact on timeline stated
- • Both parties must sign before work proceeds
- • Markup percentage disclosed (typically 15-20%)
- • Process for urgent changes
- • Right to get competing bids on large changes
Warranties and Guarantees
Understand what's covered and for how long after completion.
Warranty Coverage:
- • Workmanship warranty (typically 1-2 years)
- • Material warranties (pass-through from manufacturers)
- • Structural warranty (10 years in some states)
- • What voids the warranty
- • Process for making warranty claims
- • Response time requirements
Insurance Requirements
Proper insurance protects everyone involved. Never start work without verifying all coverage is in place.
Contractor's General Liability Insurance
Covers property damage and bodily injury caused by the contractor's work. Essential protection if something goes wrong.
Minimum coverage: $1 million per occurrence, $2 million aggregate
Request: Certificate of Insurance naming you as Additional Insured
Verify: Call the insurance company directly to confirm coverage
Workers' Compensation Insurance
Covers medical expenses and lost wages if workers are injured on your property. Without this, YOU could be liable.
Required: In most states for contractors with employees
Verify: Get certificate showing coverage for your project dates
Subcontractors: Confirm all subs have their own coverage
Builder's Risk Insurance
Covers the structure and materials during construction against fire, theft, vandalism, and weather damage.
Coverage amount: Full completed value of the project
Who provides: Typically the contractor, sometimes the owner
Duration: From start of work through completion
Your Homeowner's Insurance
Your existing policy may not adequately cover a home under major renovation. Contact your insurer before work begins.
Notify: Your insurer about the scope and timeline of renovation
Increase: Dwelling coverage to reflect new value after remodel
Add: Vacant home endorsement if moving out during construction
Consider: Umbrella policy for additional liability protection
Insurance Verification Checklist
- ✓ Request certificates of insurance from contractor
- ✓ Call insurance companies directly to verify coverage
- ✓ Confirm policy dates cover your entire project timeline
- ✓ Request to be named as Additional Insured on GL policy
- ✓ Verify all subcontractors have their own coverage
- ✓ Update your own homeowner's policy
Attorney Review: Worth Every Penny
For a project of this magnitude, professional legal review is essential. An experienced construction attorney will catch issues you won't see.
What an Attorney Reviews
- • Payment terms and protections
- • Warranty and liability clauses
- • Dispute resolution process
- • Termination provisions
- • Lien waiver requirements
- • Insurance adequacy
- • Local code compliance requirements
- • Indemnification clauses
Cost vs. Value
- • Attorney review: $500-$1,500
- • Your project value: $150,000-$500,000+
- • Potential dispute cost: $10,000-$100,000+
- • Peace of mind: Priceless
Legal review costs 0.1-1% of your project. A single prevented dispute pays for it 10x over.
Finding a Construction Attorney
- • Look for "construction law" or "real estate law" specialization
- • Ask if they've reviewed residential remodeling contracts
- • Request a flat fee quote for contract review
- • Ask your real estate agent or architect for referrals
- • Local bar association referral services
Additional Contract Protections
Lien Waivers
Subcontractors and suppliers can file liens against your property if the GC doesn't pay them—even if you paid the GC.
Protection: Require signed lien waivers from all subs and suppliers with each payment. Conditional waivers at payment, unconditional waivers after checks clear.
Dispute Resolution
Define how disputes will be handled before they occur.
Options: Mediation (recommended first step), Arbitration (binding decision), or Litigation (court). Many contracts include a mediation-first clause, which is reasonable and cost-effective.
Right to Cure
If work is defective, the contractor should have an opportunity to fix it before you hire someone else.
Reasonable terms: 30-day notice, opportunity to inspect, and reasonable time to repair. Without this, you may void warranties by having others fix issues.
Termination Provisions
Sometimes projects must end early. The contract should address this.
Include: Termination for cause (contractor default), Termination for convenience (you change mind), Payment for completed work, Return of materials, and Reasonable notice periods.
Common Mistakes to Avoid
Signing without attorney review
Why it's a problem: You may miss unfavorable terms that cost you thousands later
What to do instead: Always have a construction attorney review contracts over $50,000. It's cheap insurance.
Paying too much upfront
Why it's a problem: If contractor fails to complete work, you have no leverage and may lose money
What to do instead: Never pay more than 10% deposit. Tie payments to completed milestones.
Not verifying insurance yourself
Why it's a problem: Certificates can be outdated or fake. Coverage may not be adequate.
What to do instead: Call insurance companies directly to verify current coverage and policy limits.
Accepting vague scope language
Why it's a problem: 'Remodel bathroom' means different things to different people
What to do instead: Every detail should be specified. If in doubt, add more detail.
Ignoring lien waiver requirements
Why it's a problem: You could pay the GC, then face liens from unpaid subs
What to do instead: Require lien waivers with every payment. Make it a contract requirement.
Frequently Asked Questions
How much should I pay upfront to a contractor?
Never pay more than 10% as a deposit. A typical schedule: 10% deposit, 25% at start, 25% at rough-in, 25% at substantial completion, 15% final after punch list. Avoid contractors requesting 50%+ upfront.
What insurance should a contractor have for a whole-home remodel?
At minimum: General liability ($1-2 million per occurrence), Workers' compensation, and Builder's risk insurance. Request certificates naming you as additional insured and verify directly with insurers.
Should I hire an attorney to review my remodeling contract?
Yes. For a $150,000-$500,000+ project, $500-$1,500 for attorney review is excellent insurance. They identify unfavorable terms and may negotiate better conditions.
What happens if my contractor goes out of business during my remodel?
Proper payment structure means you've only paid for completed work. Your contract should address contractor default, and their bonding may provide protection. This is why verification matters.
Do I need to update my homeowner's insurance during a remodel?
Yes. Notify your insurer before work begins. You may need increased dwelling coverage, vacant home endorsement if moving out, builder's risk policy, and possibly umbrella coverage.
Ready for the Next Step?
With contracts reviewed and insurance verified, your project has a solid foundation. Next, you'll finalize the architectural plans that define exactly what will be built.