What could be a risk of not documenting home renovations?

Not documenting home renovations significantly impacts the valuation of the property and insurance coverage. When renovations are made, they often increase the value of the home, which should be reflected in the homeowner's insurance policy to ensure adequate coverage. If these renovations are not documented, insurance companies may be unaware of the home's true value, leading to undervaluation.

In the event of a claim, if the property is not accurately represented due to the lack of documentation, the homeowner may find themselves inadequately compensated. This could leave them financially vulnerable, as the insurance payout would not account for the improvements made. Furthermore, failing to document renovations may lead to disputes with insurers over the property's worth at the time of loss.

Thus, the correct choice emphasizes the importance of documentation for both accurate coverage and successful claims processing, ensuring homeowners are protected against potential losses related to their updated property value.