Why You Need Insurance for Building a New House

Most people don’t consider the need for insurance coverage during the construction of a new home and believe that their builder will cover any damages or losses during the process. But this isn’t always the case.

What is a Builder’s Risk Policy?

A builder’s risk policy is a type of homeowners insurance that protects the building during construction. Even building contractors with construction insurance might not cover everything that can occur during construction, including theft, vandalism, fire, or damage caused by bad weather. The coverage may fall short and not pay entirely for replacement costs, especially when the cost of building materials rapidly rises.

Homeowner needing insurance for building a new house

How to Protect Yourself During the Construction Process

There are several ways to protect you during the building construction process.

  1. Review the Construction Contract Carefully– Sometimes, the contractor expects you to provide insurance during construction. Your construction contract should indicate who is responsible for insurance and provide specific details on what it does and does not cover and the coverage amounts. If the numbers don’t add up, or the coverage seems less than adequate, consider getting an insurance for new construction policy.
  2. Ensure Protection Is in Place Before Construction Starts –Understand your insurance needs and ensure appropriate coverage before work begins. You don’t want to discover gaps in coverage in the middle of construction.
  3. Verify That the Builder Has Adequate Coverage –Your builder should have liability coverage and workers’ compensation insurance.
  4. Get Homeowners Insurance with a New Construction Endorsement– Protect yourself by adding a new construction endorsement or a builders risk policy for homeowners protected during this transition period. The new construction endorsement kicks in when the builder’s risk coverage ends.
  5. Construction Lenders Often Require Insurance Coverage–This coverage protects anyone who has a financial interest in the successful construction of the building.

Other Info You Need to Know

If you are building in a planned community or have a major builder, you might not need insurance for new construction coverage because you don’t own the lot until you settle or close the sale. However, if you purchase your own lot and build a home on it, you probably need insurance for new construction coverage.

Building a New Home? Ensure that You Have the Right Coverage During Construction

There is always a lot of home construction in the northeast Florida area. Partner with the Mizrahi and Garris Insurance Agency to ensure you’re covered during the building process. Connect with us for a free, no-obligation quote. We’ll help you find the perfect protection plan customized to your needs.

At Mizrahi and Garris, we build lifelong relationships with our customers. Let us cover your home during construction and with homeowners insurance after construction is finished. Give us a call at (904) 262-9202 or click “Free Quote” to speak with one of our insurance experts today.

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