New construction home insurance is necessary to protect your investment from the very beginning. It is similar to home owners insurance, but less comprehensive. It covers building materials and tools from fire and theft, and liability for your visitors in the event of injuries during the construction process. Your home builder or contractor should also have insurance and there may be some overlap in coverage but it is important to have insurance.
There are two choices in types of coverage, a standard homeowner’s insurance policy or a dwelling and fire policy. A standard homeowner’s policy will cover damage to the building as it is being built, and reimburse for theft losses as well. A dwelling and fire policy covers damage to the structure, but has no theft protection. Both policies offer liability protection, but it is important to get the maximum coverage for third party liability.
As with a construction loan the need for insurance varies with the situation. Variables include whether the land and materials are yours, the contractors, or the banks during the construction process. This varies according to the stipulations of the loan and the contract you have with the home builder or contractor. In some cases the builder owns the home until it is completed. In other cases you own the land and supplies and the home builder or contractor only works for you. If the contractor owns everything until the home as built you may not need insurance, but it is best to talk this over with the builder, the loan officer and perhaps an insurance specialist. If you are building the home on your own without a contractor or home builder, you will need a lot of insurance to cover all the possible things that might go wrong.
It is very important to have insurance that protects in the event of third party injury. Paying medical bills for an injured worker or visitor to your construction site could easily bankrupt you. It is also important to have your own injuries covered especially if you have no health insurance. Make sure that all potential accidents are covered by the new homeowners insurance policy. It is likely that your contractor also has insurance to cover this sort of liability, but in the event or a catastrophic accident, it could take up to the maximum of both policies to cover it. If you are the responsible party for the insurance site (your land) you must have adequate insurance. Make sure your contractor or home builder also has adequate insurance before you hire him.
It is also important to be protected against fire, theft and other possible property damage such as vandalism, or construction accident. Talk over your concerns with several insurance agents from different home owners insurance companies in order to learn exactly what type of policy you need, and get the best price on reliable new construction home insurance.