Homeowners Insurance For New Construction

Whether you're starting the home buying process for the first time or an experienced homeowner looking to upgrade, your mortgage lender will require you to obtain new home insurance. Homeowner's insurance includes several essential coverages that will protect the structure of your home, your personal property, liability, and more.

If you're about to close on a property, now is the time to start looking for insurance to protect your investment — even if it's still under construction. If you want to buy a new home, you're in luck; insurance companies prefer covering new homes because everything is new — from the foundation to the roof — and thus has a lower risk profile. Insurers charge lower premiums for newly built homes because they are less likely to suffer from issues that plague older homes, such as faulty wiring and crumbling roofs, which are more likely to cause damage that necessitate insurance involvement. Aside from weather-related claims, insurance companies do not anticipate a new homeowner filing a property claim anytime soon.

When companies calculate insurance quotes, the year your house was built accounts for a relatively small portion of the pie, but it is still a factor. Insuring a new home will cost you around $80 per month on average. Progressive was the cheapest company for a new build home, with an average monthly payment of $44 — $36 less than the national average. Consider Nationwide and USAA as alternatives; these insurers charge about $14 more per month than Progressive.

Builder's Risk Insurance: provides coverage for newly constructed homes.

If your new home is being built for you, there's one more thing to keep in mind: protecting your property while it's being built. A standard homeowners insurance policy may exclude coverage for construction-related damages. Check with your insurance agent to see if your policy covers you in these circumstances.

Because construction sites are vulnerable to perils such as vandalism and theft, your insurance company may require you to add builders risk insurance (also known as course of construction insurance) as a policy add-on to cover your home while it is under construction or if you are embarking on a major construction project or remodel.

Builders risk covers the following:

• The physical structure of the house
• Materials for construction
• Equipment both on-site and off-site

Because it is intended to be temporary, a builders risk policy provides much less coverage than a standard homeowners policy. It excludes coverage for the following:

Liability (this may be covered if your general contractor has insurance that includes liability coverage in the event of injuries and property damage).

• Personal belongings
• Extra living expenses
• Other people's medical expenses

Once the new house is finished, reassess the home's replacement cost and switch to a standard insurance policy.