Home insurance for new builds checklist & why you need it – while similar to regular home insurance there are critical differences.
When you purchase a new build property, it will almost come with a warranty (some warranties last for up to ten years) that covers problems related to the structure of the building and you may therefore assume that you do not need buildings insurance.
Despite your new building coming with a warranty, aka BuildMark warranty, this is only for structural problems caused by the developer and does not cover damage due to floods, storms or fire. It is therefore in your best interest to purchase a buildings insurance policy for your new build so you are suitably covered.
While it is not a legal requirement, most mortgage providers will insist you have home insurance in place, even on a new build.
Why it’s a good idea to buy home insurance for new builds
While a Buildmark guarantee may cover against structural damage, you aren’t protected against: flooding, fire, burglary damage, storm damage, subsidence and heave which may occur during the building of your new home and after you move in along with personal possessions not being covered either.
This is where home insurance comes in useful. It allows you to claim for issues with your house that aren’t covered by the Buildmark guarantee.
The best new build home insurance for new homes will protect you and your investment before and after you move into your new home. These policies will bring peace of mind and security, and choosing the best home insurance for new builds will require a lot of consideration and expert guidance.
How new builds home insurance is different from regular home insurance
A new home under construction needs a different type of insurance than one that’s move-in ready. New home construction insurance will cover the added risks of building a home, like theft of construction materials or natural occurrence such as dealing with the cost of flood insurance in Texas among other states where risk of hurricanes, tornadoes, torrential downpour and natural disasters is common.
A homeowners insurance policy usually covers four kinds of incidents on the insured property: interior damage, exterior damage, loss or damage of personal assets/belongings, and injury that occurs while on the property. When a claim is made on any of these incidents, the homeowner will be required to pay a deductible, which in effect is the out-of-pocket costs for the insured.
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.
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.
The Insurance Information Institute suggests that upon completion of a new build, homeowners should take the time to reevaluate their homeowners insurance coverage needs.
Though builders have their own protections on your house during building, this is limited. You may want to consider additional protection for you, your property, and your ownership rights by purchasing title insurance.
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.
