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Home > Learning Center > Home Insurance

Insuring a home while it is under construction or being built

Building a new home is not only an exciting time but extremely hectic. Everybody wants to make sure all the details are attended to and the finished product is everything anticipated. Having the proper insurance is an important detail not to over look.

Typically there are a few ways to build a home. The first model a general contractor is hired to build the house and handle the process from soup to nuts. In this case, the contractor owns the land and is building the house. There isn't anything needed on the insurance side from the homeowner side. Nothing would be in the homeowner's name at this point so liability would fall completely on the contractor if something were to happen to the house or on the property.

A bit more thought needs to go into the insurance if the homeowner owns the land and a contractor is building the house. The homeowner needs to obtain liability coverage to protect his or her assets in case a third party gets injured on the property. For example, if a teenager falls and gets hurt in the house or on the property during construction, the attorneys will sue everyone involved and the homeowner can be held liable. The property owner needs to be protected to defend this suit and preserve his or her belongings. Standard contractors insurance isn't going to cover the property owner. The homeowner also needs to make sure the contractor has current, proper and sufficient insurance coverage to begin work. The homeowner should request the contractor to name him/her as an "additional insured" on the contractor's policy. By doing so, an extra layer of protection is provided to the homeowner. If the homeowner gets sued, the builder's policy would respond along with any policy the homeowner purchases on his/her own.

Lastly, the homeowner needs to discuss who owns the material being installed in the house during construction. Either the builder or the homeowner needs to have a Builder's Risk Insurance policy in place. This policy covers the dwelling while under construction and the building materials, while on site or installed in the home, for theft. A standard homeowner's policy would exclude the theft of these materials. For example, if the owners have kitchen cabinets in the garage of the house waiting to be installed and over night they're stolen, the builder's risk will provide coverage for these, a homeowner's policy would not. Make sure this coverage is in force in the builder's name or owner's name prior to building.

Contact an agent prior to starting the process. Once the home is complete, contact your agent and cancel coverage no longer needed or convert any coverage into a homeowner's policy. After all, your home is your largest asset. Protect it.

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