How insurance works for home construction and renovation projects


How insurance works for home construction and renovation projects

The extent of the project will dictate the type of insurance coverage that you will need. Standard homeowners insurance won’t cover a home that you are building from scratch. A simple home-improvement job may require only minor adjustments to your existing home construction policy.

Insurance for a Home Under Construction

Planning a new home? You’ll know that there’s more to it than finding the right contractor and kitchen cabinets. It’s important to ensure adequate insurance coverage during the construction phase. You should ensure that your personal property, as well as the structure of your home, are adequately covered.

This is where builders risk insurance comes into play. Builders’ risk insurance covers property owners and contractors who are involved in projects under construction, renovation or repair. This policy does not cover losses that occur prior to construction or after completion. Therefore, you will need standard homeowners insurance coverage for the completion.

Is Builders Risk Insurance still necessary if you hire a contractor to build your home?

Because they are more familiar with the risks and building materials, general contractors or custom builder will often be the ones purchasing builders risk insurance. The terms of the contract between the builder and you may have to purchase builders insurance. This will ensure that the project is adequately insured. You should carefully read your contract with your builder to understand any insurance obligations. Although builders risk insurance may cover your builder, it might be very limited. Make sure your contractor has workers’ compensation coverage and liability coverage. Be sure to talk with your agent about gaps in coverage.

Insurance for Home Renovation Projects

You should inform your insurance company if you are planning on renovating or adding to an existing structure. They can double-check that your insurance company is adequately covered during the remodeling phase.

Your insurance needs will depend on the extent of the remodel and whether the residence remains occupied. Many insurance companies offer home under construction endorsements–nonstandard coverage for renovation-related injury or accidents–as an add-on to your homeowners insurance policy.

Note that homeowners insurance policies do not usually cover accidents or property damage that occurs while your home is being renovated. Your agent can help you obtain a vacant home insurance policy endorsement before you make your temporary move.

Be Covered Before you Start

Whatever the size of your home’s construction, make sure you understand your insurance requirements and get the right coverage before the work starts. It is the last thing you need in case of an accident during construction.

It doesn’t matter how far away a renovation seems, it is worth taking the time to review your current homeowners policy. Comparing other policies can help find savings, coverage gaps and more. Policygenius is an insurance marketplace that can assist you in finding the best rates for your needs.

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