When was the last time you sat down and really read the terms of your homeowners insurance policy? I don't mean the quick 411 your insurance agent gave you when they sold you the policy in the first place, I'm talking about all the fine print that's going to come back and haunt you when the time comes to file an insurance claim. Most of us take our insurance company's word for it when they tell us we're covered, and we don't take the time to find out where they're wrong-until it's far too late.

Unfortunately, one of the things that many people don't realize when they buy a homeowners insurance policy is that their insurance company is going to balk at the idea of insuring a house that's undergoing construction. If you think about it, it makes sense. After all, when would you think your house would be more vulnerable to fires and floods-when everything's where it belongs or when you've got walls ripped out, wiring and plumbing exposed and construction debris everywhere?

The first thing you want to do when you're gearing up to renovate or repair your home is make sure you've got a contractor that carries their own insurance and is certified (if possible) by whatever state regulated body certifies builders in your area. This is going to work two-fold in your favor. First, homeowners insurance companies love knowing they're working with a certified builder, because there's less chance of disaster when they know what they're doing! And when they carry their own insurance anything that happens as a result of the construction process should be covered under their policy, saving you from having to pay for it using your own.

Next, let your homeowners insurance company know ASAP that you're going to be having some work done, what that work is going to be, when it's going to start and how long you expect it to last. (Your contractor should give you a quote for this-resist the urge to tack on a month for the almost inevitable delays, you can always do that later.)During that time your insurer will probably issue you a special insurance policy designed specifically for homes under construction. You'll have to talk to your agent to find out exactly what will be covered by that policy, but anything's better than the nothing you may find yourself with otherwise.

The most important thing about bringing in a contractor for home renovation or repair is to make sure you keep your homeowners insurance in the loop from the very beginning. If something happens during construction and you file a claim, and their claims adjustor finds out you're doing construction but haven't told anyone, you could find yourself holding the bill for thousands of dollars in repairs that your homeowners insurance won't touch with a ten foot pole.

And that's a position no one should ever have to be in.