Homeowners insurance for new construction

Do you need homeowners insurance during construction?

Homeowners insurance during construction is a good idea, but might not be entirely necessary depending on the situation. If your home is being constructed by a developer who provides builder’s risk insurance and doesn’t transfer ownership to you until the house is built, you may not need to purchase a policy. Discuss the insurance with your builder as well as with your insurer to make sure you aren’t responsible for either materials or liability at the construction site.

If you’re having a home custom-built on land you've already purchased and the builder isn't responsible for insuring it, you should absolutely get a policy. You can be held liable for anything that happens on the site, and you may also be responsible for the building materials.

Again, it’s vital to discuss the details with your builder and insurance company so there are no gaps in coverage.

When to get homeowners insurance when building a house

As soon as you become legally liable for anything on the construction site, you need insurance. Again, that timing will differ depending on how your home is being built.

As a general rule, if your name is on ownership papers, you should be covered by a policy. As soon as you make a deal to have your new home built, call your insurance company to go over what coverage you may need. Find out what type of homeowners insurance for new construction your current insurer offers – you may have to look elsewhere. There are many insurance companies that offer new construction coverage.

How long do you need construction insurance?

You only need construction insurance until your home is ready to be lived in. When the construction is complete, you will need to notify your insurance company of your planned move-in date. At that point, the home can be insured on a standard home insurance policy and is no longer considered vacant or under construction.

Standard homeowners insurance includes coverage for personal property, which is not included with your insurance when building a house.

What is the average cost of construction insurance for a new home?

The cost of insurance for a newly constructed home varies. Not only will it depend on what your builder covers and what you’re responsible for, but also on how long the home is under construction and the size and building materials. It's best to discuss your needs with an insurance expert to accurately price the policy. This type of quote is usually not available online.

When it comes time to insure the completed home, you can expect to pay a little less than the average rate for insurance. New construction usually earns you an average home insurance discount of 40% on your homeowners policy. With a national average home insurance rate of $2,872 a year based on Insurance.com’s 2026 data, the average rate for a new home would be around $1,723 a year. Your rate will vary by location and other factors.