I’m building a new home. Do I need to insure it while it’s under construction? How do I insure it?

UPDATED: Nov 29, 2011

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UPDATED: Nov 29, 2011Fact Checked

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Asked November 29, 2011

1 Answer

Yes, you should insure a home, even while it is under construction, but you do not need to purchase regular homeowners insurance coverage on the home unless, and only if, you are building the home entirely yourself. A regular homeowners insurance policy includes protection for things like theft or personal property, and injury liability which could come back to haunt you and your insurance company if you have those coverage on a home while it is still under construction. If you are building the home yourself, then having regular insurance would protect you against someone stealing your materials or accidentally shooting your hand with the nail gun.

Ordinarily, the coverage you need for a home under construction is dwelling and fire coverage. This covers the structure against the perils named in the policy. Fire coverage may be included in the dwelling insurance, but if it is not, you can buy that separately. The reason you need to be protected against the perils is because the contractor who builds your home is only liable for damages that are related to building the home, not to damages from things like hurricanes, tornadoes or other disasters. And if you live in a region where special disasters like volcanoes or earthquakes happen, you will probably have to secure that coverage in addition to the dwelling coverage.

The contractor who is building the house is usually required by law to carry insurance which covers theft of materials. That is because he owns the materials until they have been built into your home. He is also responsible for any injuries suffered on the home during construction, but only injuries sustained by himself and his subcontractors. If you and a friend are touring the unfinished home and your friend steps on a rusty nail, you are the one who owns the property and therefore you are responsible for your friend's injury. The contractor is not responsible because in his eyes the friend is an uninvited visitor, and could just as easily be considered trespassing.

Answered November 29, 2011 by Anonymous

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