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Homeowners insurance during construction is a specialized policy that provides coverage for your home and addresses the risks that are unique to a building site. Those risks include the greater likelihood that an unoccupied home will be a target for vandals and thieves.

Most insurance companies offer a new home under construction policy, which may also be referred to as residential construction insurance. When construction is complete, you can shift your coverage to a standard homeowners policy.

Key takeaways

  • Most home insurance companies write policies designed specifically for new homes under construction.
  • A new home construction policy covers things like liability for a vacant home and coverage for building materials and supplies.
  • When construction is complete, you can switch to a standard homeowners policy.

Do you need homeowners insurance during construction?

It’s 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 have purchased already, and the builder is not responsible for insuring it, you should absolutely get a policy. You can be held liable for anything that happens on the site, and 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?

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 new home construction insurance 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 price out the policy accurately. 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 $2,777 a year based on’s 2022 data, the average rate for a new home would be around $1,666 a year. Of course, that varies by location and other factors.

Methodology commissioned 2022 home insurance rates and discount data from Quadrant Data Services for all ZIP codes with a dwelling coverage and liability limit of $300,000 and a $1,000 deductible.

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