Newly constructed homes typically have cheaper home insurance rates thanks to their updated construction materials and building techniques that make them better able to withstand damage — meaning you’re less likely to file a claim.
Published March 21, 20222 min read
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Homeowners insurance for new construction, or new builds, is typically more affordable than homeowners insurance for an older home. This is because newly constructed homes are made with updated construction materials, wiring, household systems, and more — which means you're less likely to file a claim.
A standard homeowners insurance company will cover your new home with the same six basic coverages offered to other homes — the main difference is that your homeowners insurance rates may be cheaper, since you’re less likely to file a claim. You may even be offered a discount on your premiums for having a newly built home.
Below are the coverages offered in a typical homeowners insurance policy.
Dwelling coverage: Pays to rebuild the structure of your home and attached structures — like a garage — if they’re damaged by a covered peril, including fire, wind, or hail.
Other structures coverage: Pays to repair other structures on your property, like a shed or detached garage, if they’re damaged by a covered peril.
Personal property coverage: Pays to repair or replace your belongings if they’re damaged or stolen.
Loss of use coverage: Pays for additional living expenses — like hotel stays, restaurant meals, and pet boarding fees — if you need to live elsewhere while your home is being rebuilt.
Medical payments coverage: Pays for more minor medical expenses — like an ambulance ride or X-rays — if someone is injured on your property, regardless of who was at fault.
Liability coverage: Pays for extensive medical expenses or legal fees if you’re found legally responsible for someone else’s injury or damaged property.
A standard homeowners insurance policy is designed for homes that are fully built and ready to be lived in. If you’re looking for coverage for a home that’s currently being built or undergoing a renovation that requires short-term construction, then you may need to purchase one of these coverage types instead.
When building a new home, you may be responsible for purchasing builders risk insurance to protect the insured property from weather-related damage and vandalism. Builders risk insurance only includes coverage for the structure of the home that’s being built and the construction materials.
Depending on your current homeowners insurance company, you may be able to add builders risk coverage to your current policy for an additional fee. If your insurer doesn’t offer it, you’ll need to purchase a separate standalone builders risk insurance policy.
The contractor may be responsible for purchasing builders risk insurance
Depending on the construction company and your contract, the construction company may be required to purchase builders risk insurance — not you. Make sure to check your contract to see if the contractors already have builders risk insurance. If they don’t, it’ll be on you to purchase it.
A standard homeowners policy likely won’t cover burglary or damage to your home while it’s under construction. Check with your insurance company to learn if you need to add a dwelling under construction endorsement to your home policy.
Dwelling under construction coverage fills the temporary gap in coverage while your home is undergoing renovations or updates. This endorsement is meant for short-term projects, like smaller renovations, not long-term construction.
A standard homeowners policy costs an average of $1,899 per year, but insurance for new homes may be less expensive. When calculating your insurance rates, insurers try to determine your risk for filing a claim.
Because new homes are built with up-to-date materials and newer appliances, they’re typically cheaper to insure since they’re better able to withstand damage. Many insurers even offer discounts for having a new home or even just a new roof.
In addition to your home’s age and build, how much your insurance costs also depends on:
Your home’s location
Your credit score
Your claims history
Below are a few insurance companies that offer discounts for newly constructed and renovated homes.
Nationwide. Offers discounts for newly purchased homes, as well as homes that have been renovated with new plumbing, heating, cooling, and electrical systems.
Allstate. Offers a new homebuyer discount if your home was newly constructed or if you bought it recently.
Travelers. Offers new homebuyer discounts if you bought your home within the last year, as well as green home discounts if your home meets certain green home construction standards.
Amica. Offers discounts for newly constructed or remodeled homes.