What Insurance Do I Need If I’m Building My Own House?

Posted March 17, 2023 in Homeowners Insurance

3 Minute Read: 

Your property insurance needs for new, single-family home construction may vary depending on a few factors. While standard homeowners insurance doesn’t cover new construction, you can purchase residential construction insurance, also called a builders risk policy. 

When construction is complete, this coverage can be switched to a standard homeowners policy.

Need builders risk insurance in Southern California? Call Gallant Risk and Insurance Services in Corona, California, today at (951) 368-0700.

What Is Builders Risk Insurance?

Builders risk insurance covers general contractors, property owners, and DIY builders for buildings being constructed, renovated or repaired during construction only. 

You can choose the time span for a builder’s risk policy, usually from six to 18 months, extend it as needed and customize the coverage to meet your specific needs or fill any gaps in your contractor’s coverage.

What Does a Building Risk Policy Cover?

Building risk insurance protects structures that are under construction or being renovated as well as equipment and building materials on the job site, in transit and off-site, which may include:

• Building materials
• Machinery
• Fixtures and wiring
• Temporary structures and modular components
• Vital documents and data

Optional coverage can include protection for scaffolding, poor workmanship and costs for removing junk and debris.

Damages Not Covered by a Building Risk Insurance Policy

Building risk insurance doesn’t cover employees, subcontractors or damages caused by the following:

• Hurricanes and flooding
• Earthquakes
• Building collapses
• Government activities and war

In California and Ohio, you can add earthquake coverage and options to repair or replace renewable energy sources like solar panels and batteries damaged during construction.

Do I Still Need Builders Risk Insurance If I’ve Hired a Contractor?

Unless you are a builder by trade, you’ll need to have a discussion with your general contractor. 

Professional builders typically have more experience and a better understanding of the risks associated with your construction and other items that need coverage, like building materials and machinery. 

Custom builders and contractors may be better suited to purchase a builders risk policy and can add the cost of a comprehensive new construction policy to your contract. 

However, while most contractors have a builders risk policy, it may be limited and insufficient to cover your investment and liability. At a minimum, confirm that your contractor is covered for liability and workers’ compensation, review the details of their new construction coverage and ensure this is included in your contract.

Building a Home on Your Own Land

If your new construction is covered under a land developer’s contract, the project is most likely fully covered. However, when building a home on land you already own, you should definitely have your own policy, as you are responsible for the cost of building materials and liable for any accidents or injuries.

Again, it’s crucial for all these details to be documented in your contract with the builder and reviewed by your insurance company.

When to Buy Builders Risk Policy

During the construction planning phase, after sorting out the details of what your contractor’s insurance policy will cover, it’s time to ensure every aspect of your new construction is insured.

Before construction commences, meet with your insurance agent to have them review the contract, any coverage provided by the contractor and your personal insurance obligations for the project.

Homes under construction are vulnerable to inclement weather, theft and vandalism. All construction projects include potential hazards to humans, animals and other nearby properties, so you’ll want to be fully covered for your liability exposure.

Builders Risk Insurance in Southern California 

Gallant Risk & Insurance Services, Inc., in Corona, California, offers builders risk insurance policies and a wide range of coverage for homeowners. Our knowledgeable insurance agents are committed to protecting homeowners and their residences starting when you break ground, throughout your occupancy and beyond.