Home Insurance Explained: Coverage For Homes Still Under Construction

​Building your dream home is an exciting journey, but it also comes with risks before you even move in. A house under construction is vulnerable to fire, theft, vandalism, and weather-related damage. That’s why having the right home insurance for homes still under construction is essential. Standard homeowners insurance may not fully apply yet, so understanding your options ensures your investment is protected from day one.

Why Homes Under Construction Need Special Coverage

• Increased risk: Construction sites often have exposed structures, incomplete systems, and valuable materials, making them more prone to accidents or theft.
  
  
• Financial protection: If disaster strikes before your home is complete, you don’t want to bear the rebuilding costs alone.
  
  
• Lender requirement: Many mortgage lenders require proof of insurance during the construction process.
  
  
• Peace of mind: Coverage allows you to focus on building your home without worrying about unforeseen losses.

Types of Coverage for Homes Under Construction
1. Builder’s Risk Insurance

• Specifically designed for homes under construction.
• Covers damage to the building, materials, and equipment from events like fire, wind, theft, or vandalism.
• Often required by lenders and contractors.

2. Dwelling Under Construction Coverage (Endorsement)

• Offered by some insurers as an endorsement to a standard homeowners policy.
• Protects the unfinished structure until construction is completed and you move in.

3. Liability Protection

• Covers injuries to third parties (such as visitors or contractors) while on your construction site.

4. Theft of Building Materials

• Some policies cover stolen construction materials, while others require separate endorsements.

5. Optional Add-Ons

• Coverage for equipment or tools on-site.
• Protection against delays caused by insured losses.

What’s Typically Not Covered

• Normal wear and tear.
• Faulty workmanship or design flaws.
• Flood and earthquake damage (require separate policies).
• Tools or equipment owned by contractors (they need their own coverage).

Tips for Homeowners

1. Start coverage early: Don’t wait until the home is nearly complete—risks exist from the first day of construction.
2. Work with your builder: Confirm what coverage they carry and what falls under your responsibility.
3. Review coverage limits: Make sure your policy reflects the projected completed value of your home.
4. Add coverage as needed: If you live in a flood- or earthquake-prone area, purchase additional policies.
5. Switch to standard homeowners insurance: Once your home is finished and occupied, update your policy.

Conclusion
Protecting a home under construction requires specialized coverage that goes beyond a standard homeowners policy. With builder’s risk insurance or dwelling under construction endorsements, you can safeguard your investment from theft, fire, and other unexpected setbacks. By reviewing your options and working with your insurer, you’ll ensure that your new home is protected from the ground up—long before you move in.

At AllRisk Auto Insurance, we aim to provide comprehensive insurance policies that make your life easier. We want to help you get insurance that fits your needs. You can get more information about our products and services by calling our agency at (360) 693-4044. Get your free quote today by CLICKING HERE. 

Disclaimer: The information presented in this blog is intended for informational purposes only and should not be considered as professional advice. It is crucial to consult with a qualified insurance agent or professional for personalized advice tailored to your specific circumstances. They can provide expert guidance and help you make informed decisions regarding your insurance needs.