Home Insurance for New Construction

New home construction insurance policies cover the home and big investments while the home is being built.
Written by Payton Ternus
Reviewed by Melanie Reiff
If you’re looking to build your dream home, you will need the right home insurance policy to match. A new home construction insurance policy will protect your new house (plus investments) while it is being built.
New-build home insurance policies are often less expensive compared to policies insuring older homes. Newer homes are generally less risky to insure thanks to modern building techniques and newer materials. Before you start shopping for home insurance quotes, make sure you go over all of the components of insuring a newly built home.
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Insurance for new construction homes

The cost of home insurance is a key component to be considered in the search for a home to buy. Usually, it works out that the newer the house, the cheaper the insurance policy. Your home’s age can influence which particular insurance endorsements would be beneficial to add to your policy.
Home type, location, belongings, and existing standard home insurance coverage will all play a part in getting your new home build insurance endorsements. For example, you may need to consider flood, earthquake, or other weather-related endorsements based on your geographic location. 
Key Takeaway: Multiple variables influence the cost of homeowners insurance, but cost is generally determined by the financial risk faced by the insurance company.

Home insurance vs. new home under construction insurance

Homeowners insurance can go a long way as a tool of protection for your house. A standard homeowners policy provides different coverages for your house, structures, land, belongings, and other property. The levels of coverage will depend on the individual policy and any endorsements added to it. 
Standard homeowners insurance policies will cover your home and some renovations, but they will not provide financial protection during construction. A homeowners insurance policy will be the best fit once construction is completed, but during construction, you will need certain coverage on your home. 
New-home-under-construction insurance provides more specific coverage than a typical homeowners policy. It protects your new house and your investments while it is being built, including the risks faced by construction materials when equipment and fixtures are on-site or in transport. 

Builder’s Risk Insurance

Insurance policies for new homes under construction may benefit from builder’s risk insurance. Builder’s risk coverage is specialized protection designed exactly for situations like construction. This kind of policy endorsement covers the building while under construction and the materials being used. 
Builder’s risk insurance can cover a variety of different things:
  • Vandalism
  • Theft
  • Lightning
  • Wind
  • Hail
  • Contamination
  • Fire
  • Explosions
This coverage is specifically for new homes under construction, but it won’t protect you when the house is completed. A standard homeowners policy will keep your house protected when the build is finished. 

Ways to save on home insurance

The cost of homeowners insurance is determined by financial risk—the less likely a house needs repairs, the cheaper the insurance will be. The policy will also be less expensive if the estimated repairs are lighter on your wallet. 
New-home-under-construction insurance is usually seen as a lesser financial risk by insurance companies and cheaper to get than policies for older homes.
You can always look at getting higher deductibles for lower premiums, but that could raise your deductible by thousands of dollars in the event of a covered loss. Another option is bundling your insurance. Bundling multiple policies together, like
home and auto insurance
, is a great way to save money!


Another great way to save money on insurance is by looking at discounts. Insurance companies typically offer discounts for new homes under construction. Here are a few discounts that may be available:
  • New home construction discount: Often one of the most significant discounts and will save homeowners the most during the first few years of coverage
  • Home security discount: Devices like fire extinguishers, smoke alarms, and burglar alarms can help decrease insurance premiums
  • Roofing discounts: New sturdy roofs can reduce premiums
  • Payments: Going paperless, using EFT, paying in full, and setting up automatic payments can provide discounts
  • Claims-free: Having a minimal record of losses may help lower your premiums
  • Senior or mature homeowners: Being an experienced homeowner may result in a discount on your next homeowners policy
  • Smoke-free: No smoking on the property can save you money

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The owner of the house is responsible for insuring it while it is under construction. The standard approach for obtaining the right coverage is getting a homeowners insurance new construction endorsement, and builder’s risk coverage is specially designed for this. Your contractors may have their own certain types of insurance, but you as the owner are responsible for your home.
A standard homeowners insurance policy is not the right kind of policy for home construction. Homeowners' policies can often only cover some renovations. Insurance companies do not like to issue standard policies for homes under construction and will recommend new construction endorsements.
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