Options For Insuring A New Home Under Construction
If you have a new home under construction, you will want to purchase a home insurance policy even before construction begins. When shopping for insurance to protect your investment, consider the options available to protect yourself from liability and insure the structure and building materials on the site.
Standard Home Insurance Policy
A standard home insurance policy provides coverage for building materials, including lumber and roofing shingles, that may be stolen from the property while your house is under construction. However, your contractor's insurance should cover the theft of uninstalled finished products such as a bathroom sink, tub, and faucets. Any personal property you keep at the home while it's being constructed is not covered until the dwelling has doors and windows installed and can be securely locked to protect what's inside.
Some policies insuring new homes during construction are temporary with the amount of coverage increasing as each major step (e.g., foundation, frame, roof) in the construction process is completed. If the house burns down while it's being built, the insurance will reimburse you the cost to rebuild the structure to the stage of construction it was in at the time. Once the home is finished, you need to reassess your insurance needs to make certain that you have adequate coverage.
Dwelling and Fire Policy
A dwelling and fire policy is another option that covers damage to the structure of the home that may occur before construction is complete. This type of policy generally covers damage due to fire, wind, and vandalism. If you have a standard home insurance policy on your current home, that policy will also provide liability and theft coverage for the home being constructed.
In a situation where you are renting a home or living with relatives while contractors are building your new home, and you don't currently have a home insurance policy, you can buy a comprehensive dwelling and fire policy that includes property, liability, and theft coverage. Should you only take out a dwelling and fire policy during the construction phase, you will need to buy a standard home insurance policy once your new home is complete so that it's fully covered.
When You May Not Need Coverage
Depending on the contract you have with a home builder or contractor, the builder may own the home until construction is completed and the home is ready for closing. In that case, you may not need home insurance coverage until the home belongs to you. But if you own the land and building materials and hire a contractor to do the work, you will need to insure the home during the construction process.
You also need to make certain that the contractors and subcontractors building your home have both worker's compensation and contractor's liability insurance in case a worker gets injured or a contractor somehow damages the home. If you find that a subcontractor is underinsured, you can protect yourself against liability by buying extra liability coverage on your home policy – perhaps in the form of an umbrella insurance policy. That way, you will have additional coverage if a worker or visitor on the property is injured and wins a lawsuit that exceeds the liability limits provided by your home insurance policy.
Contact a local provider, such as AZBY Brokerage Inc, for further assistance.