Eric Stauffer is a former insurance agent and banker turned consumer advocate. His priority is to help educate individuals and families about the different types of insurance they need, and assist them in finding the best place to get it.

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UPDATED: Oct 1, 2020

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The Highlights

  • New build home insurance policies will vary with location based on factors like crime rates, proximity to fire departments, bodies of water, etc.
  • Previous home insurance new build claims may affect home insurance quotes.
  • New construction home insurance generally costs less than an existing home.

The best new build 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, but choosing the right policy may be difficult.

Every company is different, so compare home insurance companies to ensure you have the one that is best for you. New build home insurance is needed for homeowners during construction and after move-in, and there are many factors that affect a home insurance quote for a new build.

Affordable new build home insurance quotes don’t have to be hard to find. Enter your ZIP code to see what’s offered in your region.

Do you need new build house insurance or homeowners insurance for new construction? Continue reading for more information on companies we suggest and how new home homeowners insurance compares with new builds.

Table of Contents

Do I need home insurance on a new build?

Short answer? Yes.

New build home insurance protects your house and other structures on your property — including personal belongings — that may be damaged if an incident happens that is within the limits of your policy.

This type of protection also typically includes liability coverage in the event that the homeowner is held responsible for an incident that happens on their property.

Homeowners insurance with new homes during construction is a different policy than post-build.

Construction companies will typically have their own policy that covers the building materials and liability insurance that protects the company.

This protection does not cover the buyer. There are companies that will sell policies that cover the construction period and then convert into traditional homeowners insurance once the buyer moves in. New home — or building home — insurance is needed during these early stages.

When am I supposed to shop for home insurance on a new build home?

Before considering how much newly constructed home insurance is going to cost, buyers should be thinking about their needs and what could happen during and after construction.

One common mistake, according to community contractors Stauffer and Sons, is last-minute purchasing of insurance. So when to apply for home insurance on a new build?

During the early stages of home buying, contact insurance agents before signing any contracts. Talk about what you’re thinking about buying and what coverage comes with each policy.

Some questions to ask include:

  • Is the land I want to build on insurable?
  • What is a base quote for the type of coverage I need?
  • Are there any location-based factors that will impact my insurance policy?

Read on to see how homeowners insurance and new build insurance compares.

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How does homeowners insurance compare with new build insurance?

If you do not own a home and have hired a contractor, or you’re building the house yourself, you will need to get it insured. A course of construction policy is designed to provide coverage similar to a builder’s risk (some companies still call it builder’s risk).

Check out this short video explaining builder’s risk insurance.

With the right endorsements, it covers liability as well as construction materials and other property on the site being installed in the house, such as new appliances and light fixtures.

If you currently own a home and you’re doing a new build, one option could be to call your current homeowners insurance agent to discuss extending the liability coverage to the new home during construction. This may be compatible with the builder’s coverage.

When building a new home, liability coverage is highly recommended. However, ownership of the land may vary during the preliminary stages of new build construction.

Generally, contractors own the land when hired to build a new house, but that is not always the case. When you do not own the land until post-build, liability is completely the responsibility of the contractor, as there is nothing with the buyer’s name on it. If you do own the land, liability coverage is needed in the case of an accident where someone is injured during construction.

There may be options within the contractor’s insurance policy — if specifically added — that cover this liability.

In most cases, a single policy is issued — it’s a homeowners policy that is a course of construction for a certain period of time and converts to traditional homeowners insurance when the construction is complete. The time period allowed for construction to be complete varies, and it may be anywhere from six to 12 months.

Something else to consider is the protection of title insurance. Title insurance is protection related to losses of ownership of property. During the home buying process, property ownership history will play an important role in determining insurance rates.

Best case scenario, the property is owned outright, without any legal claims or liens against it.

Worst case scenario, there is some unforeseen issue that may create hurdles as buyers seek to purchase the property — i.e. an unknown heir to the land or an issue with the property title.

Another aspect to consider when deciding the best insurance for your new build is the type of structure you’ve built and your intention for the home. Single-family and townhomes will have varying rates, as will rental and vacation homes.

Types of Home Insurance Policies
Policy FormType of HomeNamed or All Perils - DwellingNamed or All Perils - Contents
HO1 Basic FormSingle-familyNamedNamed when included
HO2 Broad FormSingle-familyNamedNamed
HO3 Special FormSingle-familyAllNamed
HO4 Tenant's FormRental dwelling - all typesNot IncludedNamed
HO5 Comprehensive FormSingle-familyAllAll
HO6 Condominium FormCondo, TownhomeAll - internal structure onlyNamed
HO7 Mobile Home FormMobile and manufactured homesAllNamed
HO8 Older Home FormSingle-family older/historic homesAllNamed
DP Dwelling FireSingle-family, rental dwelling, seasonal, vacantNamedNamed
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Now you know about new construction homeowners insurance. There is a difference between new build home insurance coverage and what is called self build home insurance coverage, which protects you from any risk connected to self-build construction.

The owner’s title helps identify potential risks before the transaction is completed. What is the owner’s title insurance for a new home build? One of two types of title insurance policies.

Types of Coverage

Premises Liability – This protection is beneficial when any injuries or damages occur on your property. For example, if you stop by the construction site with a friend, and your friend falls and gets hurt, the premises liability will cover you.

Building Materials Coverage – This protection will cover any building materials not yet installed in the new home in the event of theft or loss due to weather, fire, or other risks. Endorsements may also cover materials in transit to the construction site.

Structure Coverage – This protects you from theft or damage to the home itself and anything already installed in the home, which includes protection from theft, vandalism, fire, and more.

Some factors that will affect your insurance rates include:

  • New construction vs. pre-existing homes: Insurance companies tend to favor new build homes, so they will be less expensive to insure than older homes.
    • This is because a historic or older home will need hefty reconstruction work in order to restore it to a better condition if a claim for damage is filed.
  • Types of construction: Insurance rates are determined by age of the structure and the type of construction, the vulnerability to damage, and the cost to repair or rebuild from that damage.
    • For example, a brick home will cost less to insure versus a wood-frame house, as brick is less susceptible to fires and some other disasters.
  • Location: It’s true; everything is about location, location, location. Homeowners insurance rates can increase or decrease based on region, neighborhood, and proximity to certain services.
    • Building a new home in areas with high weather risks — such as flooding, or other natural disasters — are more likely to have higher insurance rates. This is also the case when buying a new home in neighborhoods with high break-in rates or where homes have a higher risk of being damaged.
    • Another factor is the proximity to large bodies water, such as lakes, rivers, oceans — as this increases the possibility of damage from tropical storms and flooding. However, homes that are built near fire departments may have lower rates, as fire damage may be contained more quickly.
  • Other structures: Adding pools and spas to your home may increase the cost of an insurance policy.
    • This is mainly due to liability coverage.
  • Credit and claim history: Construction insurance agencies look at credit history and whether there are previous damage claims from the buyers.
    • This helps companies identify homeowners that may be of higher risk or may have higher claims.

Now that you know about the types of coverage available, it’s time to find out what this coverage level costs.

How much is home insurance for purchasing a new build home?

So how much home insurance should I get for purchasing a new build home? Standard homeowners insurance policies cover disasters — damage due to flooding, storms, hail, accidents, etc. — and the rebuild of homes after these situations.

If and when this happens, it’s important to make sure your home is not only insured during construction but after as well.

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.

Getting Home Insurance Quotes

Is insurance more for a new build or older home? Generally, building a new home is going to be more affordable than purchasing an existing home — especially if the home is older or in a historic area.

So, how to get a quote for new home build insurance? How much will your new build home insurance cost? The size of your home will play a role. The video below discusses some of the other factors that can affect homeowners insurance rates.

Some of the best home insurance for new builds comes from the big names in the insurance game like Liberty Mutal, Allstate, State Farm, and others. These top three offer homeowners flexibility as they hunt for the right place to build their homes. Also, if you’re moving from one home into your newly constructed home, these companies will likely transfer your policy to accommodate your move.

Liberty Mutual is one of the top insurance companies recommended by Expert Insurance Reviews. Check out our Liberty Mutual insurance review. It’s one of the largest insurance companies in the U.S. and covers all 50 states.

The company doesn’t just focus on home insurance, so it may even benefit the policyholder to have all their insurance needs wrapped under one umbrella. Liberty Mutual is a mutual insurance company, which means it’s structured in a way that allows profits to be issued back to its policyholders through reduced premiums or dividends.

State Farm, another large nationwide company, is trusted by many Americans for its home and auto insurance policies. The company has been nationally rated by the National Association of Insurance Commissioners as a top property insurance company.

Allstate, rated with an A+ by the Better Business Bureau, is highly recommended for its consumer satisfaction. Its homeowners insurance policies include standard structure and personal property coverage. Allstate also provides coverage for renters and landlords, should a homeowner want to rent out their home. Check out our Allstate review. 

Research Your Needs

Before deciding where you would like to build your home, it’s important to consider the factors discussed in this article. Your policy costs will vary depending on the additions added to the home structure, as well as where the home is located.

Are you ready to buy new build home insurance? Enter your ZIP code above to start comparing options for the insurance needed when building a new home. Which new build home insurance company is best for you? Find out now.

The best home insurance for new builds will depend on the specific needs of the homeowner, so do your research to find out what works best for you.

References:

    1. https://www.iii.org/article/how-much-homeowners-insurance-do-you-need
    2. community contractors Stauffer and Sons