Building a new home is one of the most exciting projects you will ever take on. You get to choose the layout, the finishes, the materials, and the small details that turn a house into your home. But while most homeowners focus on design decisions, one critical piece is often overlooked: insurance during construction.
A home under construction faces very different risks than a finished, occupied property. Storms, theft, vandalism, and accidental damage can derail your project and create serious financial setbacks. That is why securing the right insurance coverage before construction begins is not optional. It is essential.
The guidance in this article is informed by insights from Sheila Koester, Broker at Higgins Insurance, and Melissa Bill, Bilingual Property Claims Adjuster at Curo Claims Services.
Why Insurance During Construction Is Different
Many homeowners assume their contractor’s insurance covers everything during the build. That is not always the case.
A contractor’s insurance is designed to protect their business. It typically includes Commercial General Liability (CGL) coverage, which protects against claims arising from their operations. However, it does not automatically protect your financial investment in the structure itself.
During construction, your property is exposed in ways a completed home is not:
Valuable materials such as lumber, wiring, plumbing fixtures, and appliances are often stored on site.
The home is unoccupied and not fully secured.
Weather exposure can cause significant damage before the building envelope is complete.
Construction activity increases the risk of accidental damage.
This is where Builder’s Risk insurance, also known as Dwelling Under Construction coverage, comes into play.
Start With Builder’s Risk Insurance
A Builder’s Risk policy is designed specifically for homes under construction. It helps protect the structure, materials, and in many cases, certain soft costs associated with delays.
Typical coverage may include:
Damage to the structure from insured perils such as fire or wind.
Theft of building materials on site.
Vandalism.
Some weather-related damage, depending on the policy.
It is important to understand that Builder’s Risk policies have limitations. As Melissa Bill explains, these policies generally do not cover faulty workmanship, defective design, or defective materials. They may cover resulting damage, but they do not pay to correct poor work itself.
This makes hiring a reputable contractor critical. It also reinforces why insurance should be discussed early in the planning process.
The Most Important Step: Contact Your Broker Early
According to Sheila Koester, one of the biggest mistakes homeowners make is waiting too long to involve their insurance broker.
The first and most important step is to shop for insurance before breaking ground.
Insurers will ask for detailed information about the build, including:
Construction type and materials.
Square footage.
Heating source.
Estimated completed value of the home.
Project timelines and expected completion date.
Accurate information ensures that the policy reflects the true replacement cost of the finished structure and that coverage remains active for the entire construction period.
Starting the conversation early prevents coverage gaps, delays in policy issuance, and unexpected exposures.
Liability: The Detail That Changes Everything
One of the most important elements to review is liability.
Sheila Koester emphasizes that homeowners must carefully review the building contract and clearly understand who is responsible for:
The job site.
Materials stored on site.
Insurance coverage during each phase of construction.
Liability for injuries or property damage.
The contract wording can significantly impact how insurance responds. Whether you or your contractor is responsible for certain aspects of the build can change what coverage you need and how claims are handled.
Insurers will often request proof of your general contractor’s Commercial General Liability policy and their Builder’s Risk coverage, if applicable. Confirming that the contractor has proper insurance in place helps clarify which policy responds to which type of loss and protects you from potential coverage disputes.
Hiring an established contractor who can provide proof of appropriate insurance is not just good practice. It is a key risk management step.
Additional Requirements During Construction
Insurance coverage does not remove the responsibility to manage risk during the build. Insurers still expect reasonable precautions to prevent avoidable losses.
Heat Maintenance
Once plumbing is installed, the home must be properly heated, especially during colder months. Unheated sites are at high risk for frozen pipes and water damage. Failure to maintain heat can lead to denied claims.
Regular Inspections
Because the home is unoccupied, insurers typically expect regular site inspections. Frequent checks help identify water intrusion, vandalism, or equipment issues before they escalate into major losses.
Site Security
Even though no one is living in the home, reasonable security measures are expected. This may include locked doors, adequate lighting, fencing, and secure storage of materials. An unsecured site increases the risk of theft and vandalism.
Choosing the Right Coverage for Your Build
The cost of Builder’s Risk insurance varies depending on:
Project size and value.
Location and local risk factors.
Materials being used.
Timeline and construction method.
Policies typically cost a percentage of the overall construction budget. While this adds to your upfront expenses, the cost is small compared to the financial impact of an uninsured loss.
Once construction is complete, your Builder’s Risk policy transitions to a standard homeowners insurance policy. New homes often benefit from modern building standards and materials, which can positively influence long-term insurance rates.
Sustainable and resilient construction methods may also play a role in insurance considerations. Materials and systems that improve fire resistance, structural durability, and energy efficiency can reduce risk over time, which insurers recognize when assessing exposure.
Final Word: Protect Your Investment From Day One
Building a home is one of the largest investments you will ever make. Insurance for a home under construction is not just a technical requirement. It is financial protection for your vision.
The key lesson is simple: involve your insurance broker before construction begins. Review your contract carefully. Verify your contractor’s insurance. Clarify liability. Confirm the right Builder’s Risk coverage is in place from day one.
As highlighted by Sheila Koester of Higgins Insurance and Melissa Bill of Curo Claims Services, being proactive at the start of your build can prevent costly surprises later.
Before the first shovel hits the ground, make sure your coverage is in place. It is one of the smartest decisions you can make during your home-building journey.
Disclaimer: This article is for general information only and does not constitute personalized insurance advice. Consult a licensed insurance professional to determine the coverage appropriate for your specific project.