Missed deadlines. Plastic, sheet-covered flooring, and personal items. Never-ending dust.
If you’re building or renovating your home, these pesky construction frustrations aren’t the only thing you’ll need to deal with.
You’ll also have to understand how your home insurance policy applies during this time.
While most policies provide coverage for damage that occurs to your home under construction, there are some important things to keep in mind. In this post, we'll discuss the basics of home insurance during a build and offer some tips on staying protected.
Here’s what you’ll learn:
- Home insurance during construction
- How to make sure your home is covered during construction
- Shouldn’t your contractor have coverage?
- What does a new home construction endorsement cover?
- Do you need insurance for home renovation?
HOME INSURANCE DURING CONSTRUCTION
If you're in the process of building a new home, you may be wondering if you need to purchase home construction insurance.
The short answer? It depends on your circumstances.
If you have a mortgage on your home, your lender will likely require you to have home construction insurance in place. However, even if you're not required to purchase insurance, it's still a good idea to consider it.
A home construction insurance policy (or builders' risk) can help protect you financially if your home is damaged or destroyed by fire, theft, vandalism, or another covered event.
If you don't have insurance and your home is damaged, you'll be responsible for paying for all repairs or replacement costs out of your pocket. As you can imagine, in some cases, this can be extremely costly.
Again, while home construction insurance isn't required in all cases, it's definitely something to consider if you're building a new home.
HOW TO MAKE SURE YOUR HOME IS COVERED DURING CONSTRUCTION
One way to cover your new home during construction is by purchasing a home insurance construction policy.
You can talk to your insurance agent about this special home construction policy (also known as dwelling under construction and builder’s risk). This will cover you for any damage to the building as it's being built, including fire, weather damage, and theft. The policy will also protect you if someone is injured on your property during construction.
To get coverage, you'll need to purchase the policy before construction begins and make sure it includes coverage for your specific project. Once construction is complete, you can switch to a standard homeowners insurance policy.
In the meantime, make sure to keep your contractor informed of the coverage so they can take proper precautions while working on your new home.
SHOULDN’T YOUR CONTRACTOR HAVE COVERAGE?
The question you might be asking right now is: “Well, shouldn’t my contractor have coverage?”
The short answer is yes, they should, but don't rely on their coverage.
Contracting companies typically only have coverage for themselves, their business, and their tools and equipment. So it's best to consider getting an endorsement before the project even begins.
WHAT DOES A NEW HOME CONSTRUCTION ENDORSEMENT COVER?
Many home insurance policies exclude coverage for buildings while they are under construction. However, with a home insurance construction policy, the building is covered during the work, including the used building materials.
This insurance endorsement covers several different risks, including:
- Extreme weather (lightning, hail, and wind)
- Fire
- Theft
- Vandalism
- Explosions
- Contamination
As a result, a home construction policy can provide peace of mind for builders and homeowners alike.
DO YOU NEED INSURANCE FOR HOME RENOVATION?
If you’re remodeling (and aren’t working on a new home build), you might be wondering whether you need special insurance.
In most cases, the answer will depend on the type of remodel you’re doing: are you simply replacing your bathtub or are you adding on a whole addition to your home?
No matter what repair or renovation work you’re having done, the best thing you can do is reach out to your insurance provider and communicate the plan. They’ll be able to give you a recommendation based on your renovation project and your policy.
Additionally, if you plan to leave your home during renovations, your typical homeowners insurance changes for a vacant home.
No matter what type of home construction or renovation you’re working on, contact your home insurance agent to see if an insurance construction endorsement is right for you. As with any policy, it’s always better to be safe than sorry.
If you need help finding the best homeowners insurance coverage for your new home build or renovation, start by speaking to a SimplyIOA agent at 833.872.4467 or get a homeowners insurance quote online now.
