Home Insurance for New Construction : Why Do You Need It?
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If you’re building a new home or renovating an existing home, your traditional homeowners insurance policy doesn’t protect you against all of the potential risks that come with construction. To fully protect your home while it’s under construction, you’ll need a specific policy called new construction homeowners insurance.
New construction homeowners insurance is a short-term policy that protects your home during the period it’s under construction, as well as for a few months after the work is complete. This home insurance for new construction doesn’t offer the amount of coverage that a traditional homeowners insurance policy does, but it does cover certain key elements, including your home’s structure, building materials, and construction equipment when it’s on-site and off-site.
For example, if your new home is vandalized while it’s under construction, new construction homeowners insurance can help cover the costs of repairing the damage. If materials are stolen from the site, the insurance can help cover the costs of replacing them.
While new construction homeowners insurance covers many of the potential expenses you could face while a home is under construction, it doesn’t cover everything. This type of insurance typically won’t cover your personal property, such as any belongings that are damaged or stolen during construction. It also doesn’t cover living expenses; if you’re displaced from the home because of an accident or damage caused during the construction, you’ll be responsible for your own living expenses.
This coverage also typically doesn’t pay for medical expenses incurred by others. If a carpenter is injured on site, your contractor’s insurance would be responsible for covering those medical bills.
Generally, you’ll need insurance when building a house. Unless you’re able to fully finance the build yourself from the beginning, your mortgage company will require you to have insurance.
Most contractors will have a builder’s risk insurance policy when they begin construction on your house, but you should still verify the coverage is in place before the project starts. Even if your contractor has their own insurance, they will probably require you to carry your own insurance to protect the project.
And, even if you’re renovating your home and have an existing homeowners insurance policy, that policy won’t necessarily cover issues that could occur during construction, like the theft or damage of construction equipment or the theft of construction supplies. Investing in new construction home insurance gives you an extra layer of specialized protection during the construction phase.
If you’re planning a new build or a renovation, you can save on your new construction home insurance by shopping around and comparing quotes. You can get free home insurance quotes online today to see how the premiums, coverage limitations, and deductibles compare. Then, you can decide which policy is the best choice for your construction project.
Paige Cerulli Paige Cerulli is a freelance content writer and journalist who specializes in personal finance topics. She graduated from Westfield State University and brings more than a decade of professional writing experience to the ConsumerCoverage team. Paige’s work has appeared in outlets including USA Today, Business Insider, and more.
