Homeowners Insurance for New Construction

Homeowners Insurance for New Construction

From curtains to ceiling designs, you have everything in mind when it comes to shifting to a new house, especially if it’s new construction. There are about a million things that can make your that can make a new house your home, and homeowner’s insurance is one of them.

And, when it comes to purchasing your new home on mortgage, getting a homeowner’s insurance for new construction becomes mandatory.

However, it’s good that new construction coverages are often less expensive, and you can get about thousands of options from different insurance agents to decide upon the best quote.

Here’s a bit on why homeowner’s insurance for new constructions is necessary and how to get one.

Why Do You Need Different Insurance for New Construction?

It’s a fact that new constructions are prone to possible vandalism, thefts and weather-related losses. This is because new structures are made with newer materials and the latest techniques. This puts the construction at high risk.

Therefore, it is recommended to get your new house insured before the unexpected happens. Moreover, a traditional homeowner’s insurance offers additional coverage, which a new home doesn’t require.

As a result, it is recommended to get new construction insurance, which is relatively cheaper than traditional mortgage insurance and offers the right amount of coverage for your new home.

Types of New Construction Insurance

When it comes to homeowner’s insurance for new construction, there are three types of coverages available-

Premises Liability

Premises liability offers coverage against injuries caused to a guest under your property due to your negligence. If you invited a person over and they are accidentally injured, this coverage will provide protection against medical bills and legal fees involved.

For instance, your hired painter was injured by a case of a fall ceiling. Because the incident was caused due to your negligence, you would be liable to pay for the medical bills of the person.

The person injured would have to prove that they were lawfully invited to your property and you were negligent enough for providing an unsafe environment to the guest.

Moreover, if the person injured was proved to be trespassing, you would not be liable to pay for any of the medical bills. However, in case a child was attracted to your property, say the child trespassed the property to visit your pool and got injured while doing so, you would be liable to pay for their medical bills.

Building Materials Coverage

Builder’s risk insurance or building materials coverage offers protection against the cost of repairing a construction site or a home that is under serious renovation.

This policy offers coverage in case the house gets hit by structural damage from weather, vandalism, on-site theft and fire damage.

However, the insurance does not cover the following-

  • Employee injuries
  • Damage from natural disasters
  • Damage caused to tools and equipment
  • Damage caused due to faulty designs and materials.

Structure Coverage

Structure coverage is a part of homeowner’s insurance that offers protection against any damages incurred to the structures other than your home.

For instance, a tree falls on your garage; this insurance will pay for that. The insurance offers coverage for a fence, a detached garage, gazebo and an in-ground swimming pool.

How Much Does New Construction Insurance Cost?

Here’s a fact. The less likely the house is vulnerable to the possible damages, the cheaper your policy will be. And when it comes to determining the cost of a homeowner’s policy, the following two factors play a vital role-

  • The estimated frequency of possible claims
  • The replacement cost of the house

The newer the house, the cheaper the policy. Therefore, it is recommended to get the policy as soon as possible to qualify for the lowest rates possible.

The rates also differ from company to company. USAA, for instance, offers a homeowner’s insurance policy for a $250,000 dwelling at the cost of $992, which is relatively cheaper than the $1,458 cost offered by Allstate for a $250,000 dwelling.

What about the Builder’s Insurance?

A builder’s risk insurance is a type of coverage that offers protection while the house in under-construction. In most cases, it is a mandatory requirement asked by the mortgage lenders and is also known as renovation insurance or builder’s insurance.

This policy offers additional coverage to the under-constructed structure of the house. It protects your soon-to-be home against damage caused by natural disasters, theft, bad weather and vandalism. However, you can also opt for a plan that offers coverage for detached structures of the house like temporary fencing, usually installed during construction and landscaping.

While the list of covered perils differ from one policy to another and company to company, here’s a list of the perils that are covered by a basic builder’s insurance-

  • Hail
  • Lightening
  • Vandalism
  • Vehicle collision
  • Explosion
  • Fire
  • Theft

The policy, however, will not offer coverage against damages incurred due to acts of terrorism, war, natural disasters, employee theft, wear and tear, workmanship, mechanical breakdowns and faulty designs.

When to Switch from New Construction to Homeowners Insurance?

Switching your new construction policy to a traditional homeowner’s insurance policy really depends upon you. If you feel like you have fully adapted to the new house and are fully set to make the new house your home, you can convert it any time you want.

However, always ensure to compare the rates received from different policy agents to decide upon the best.

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