Homeowners insurance during construction: Your complete guide

Whether you need special insurance during construction depends on the scope of the project and the type of coverage your contractor provides.

Pat Howard 1600Jennifer Gimbel

By

Pat Howard

Pat Howard

Managing Editor & Licensed Home Insurance Expert

Pat Howard is a managing editor and licensed home insurance expert at Policygenius, where he specializes in homeowners insurance. His work and expertise has been featured in MarketWatch, Real Simple, Fox Business, VentureBeat, This Old House, Investopedia, Fatherly, Lifehacker, Better Homes & Garden, Property Casualty 360, and elsewhere.

&Jennifer Gimbel

Jennifer Gimbel

Senior Managing Editor & Home Insurance Expert

Jennifer Gimbel is a senior managing editor and home insurance expert at Policygenius, where she oversees our homeowners insurance coverage. Previously, she was the managing editor at Finder.com and a content strategist at Babble.com.

Updated|3 min read

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Key takeaways

  • Standard homeowners insurance policies don’t cover homes that are under construction.

  • If you’re planning short-term home renovations, you can add home under construction insurance (also called a dwelling under construction endorsement) to your policy for additional protection.

  • For more extensive construction projects or new home builds, you’ll need builders risk insurance.

  • Builders risk insurance and home under construction coverage protects your home during construction and building materials from theft, fire, vandalism, and storm damage.

Do I need homeowners insurance during construction?

You might need additional home insurance coverage or an entirely separate insurance policy while your home is under construction, though it all depends on how large of a project you’re undertaking and the type of insurance coverage your contractor or builder provides. The two main types of insurance during construction that you might want to consider are home under construction insurance and builders risk insurance. 

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Home under construction insurance vs. builders risk insurance

Home under construction insurance

Builders risk insurance

What it is

An endorsement you can add to your standard home insurance policy to ensure you’re fully protected while your home is under construction

An entirely separate insurance policy that’s either purchased by you or your contractor prior to the start of construction

When it’s necessary

Short-term construction projects, like adding a new room to your home or remodeling your kitchen

New construction homes or long-term construction projects, like renovations or repairs that are expected to last longer than a month or two

What’s covered

Fire, storm damage, burst pipes, theft, & other covered perils — plus soft costs associated with construction delays, building materials, & premises liability

Your home and construction materials from fire, vandalism, storm damage, theft, & other covered perils — but not liability

How much it costs

Varies based on the scope of the project

Varies based on the scope of the project

Home under construction insurance

Also known as a dwelling under construction endorsement, home under construction insurance is a home insurance coverage add-on designed for home construction projects that aren't expected to take longer than a month or two. Your standard policy coverage won’t cover burglary or updates to your house if it’s considered to be under construction.

If you’re planning a home remodel or renovation, check with your insurance company to see if this endorsement is necessary. Adding a new room to your home or remodeling the entire kitchen might be viewed as a construction project to your insurer, especially if you need to stay somewhere else during the project.

Keep in mind that this endorsement is not for long-term construction projects. If the renovations or repairs are expected to last longer than a month or two, you’ll need coverage that’s intended for lengthy, extended repairs like builders risk insurance.

What is covered by home under construction insurance?

This coverage is designed to cover homes under construction in the same way that a standard policy covers completed homes. With dwelling under construction coverage, your home is covered against things like fire, storm damage, burst pipes, theft, and other covered perils while it’s under construction. 

Home under construction insurance also typically include special coverages to protect against losses that are unique to construction projects, including:

  • Soft costs: If the construction is delayed due to a covered loss, this endorsement will cover the “soft costs” associated with the project. Soft costs include licensing and permit fees, interest on the construction loan, and other costs that are caused by the project’s delay.

  • Building materials and supplies: Covers any building materials or tools on-site that are being used to construct or repair the house, including protection for materials or equipment in transit or stored at a temporary location.

  • Premises liability: If a visitor is injured at your home during the course of construction, this coverage can pay for any potential medical or legal expenses arising from the incident.

Keep in mind that in order to be covered by this policy endorsement, the construction project needs to be carried out by a licensed builder. If you file a claim for damages and your insurer discovers that you used an unlicensed contractor, your claim will likely be denied. 

How much does home under construction insurance cost?

The cost of home under construction coverage will depend on the scope of the project, the materials being used, and the project’s duration. In general, you’ll pay progressively more in premiums as the project progresses and you add more square footage, install flooring and appliances, and other factors that increase the rebuild value of your home. 

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Builders risk insurance

Builders risk insurance is designed to provide coverage if you’re building a new construction home or making extensive renovations to your home that will take months on end. Entirely separate from home insurance, whether you or your contractor is responsible for purchasing this policy will depend on the terms of your construction contract.

Builders risk policies are typically offered in three, six, nine, or twelve month contracts. The length of your policy term will depend on how extensive your construction project is and how long it’s expected to take.

→ Take a deeper dive into builders risk insurance

What is covered by builders risk insurance?

Builders risk insurance covers the construction of your home, any additional structures on site, and construction materials from fire, wind, lightning, hail, theft, vandalism, and explosions. Unlike dwelling under construction insurance, builders risk insurance doesn’t include liability coverage. Instead, your contractor or builder likely has general liability insurance to cover any issues that may arise during the build.  

How much does builders risk insurance cost?

The cost of builders risk insurance will vary widely based on location, the type of construction project you’re undertaking, construction materials, and how long the project is expected to take. In general, builders risk insurance in an area that’s at high risk of tornadoes, hurricanes, or wildfires will likely cost more than a policy for a construction project in a more mild location. Likewise, major remodels and projects with high-quality materials will likely lead to higher insurance premiums.

Compare insurance quotes for homes under construction

We don't sell your information to third parties.

Authors

Managing Editor & Licensed Home Insurance Expert

Pat Howard

Managing Editor & Licensed Home Insurance Expert

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Pat Howard is a managing editor and licensed home insurance expert at Policygenius, where he specializes in homeowners insurance. His work and expertise has been featured in MarketWatch, Real Simple, Fox Business, VentureBeat, This Old House, Investopedia, Fatherly, Lifehacker, Better Homes & Garden, Property Casualty 360, and elsewhere.

Senior Managing Editor & Home Insurance Expert

Jennifer Gimbel

Senior Managing Editor & Home Insurance Expert

gray linkedin icon link

Jennifer Gimbel is a senior managing editor and home insurance expert at Policygenius, where she oversees our homeowners insurance coverage. Previously, she was the managing editor at Finder.com and a content strategist at Babble.com.

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