Rarely in life will you have to make as many decisions as when you’re building a house from scratch. what floor plan do you want? Which Contractor Should You Hire? brick or wood cladding? brushed gold or brass kitchen hardware? the decisions are infinite…
But one of the most important decisions you have to make is about your homeowners insurance. Construction insurance on new homes is a little different than homeowner’s insurance on a completely built home. You may be wondering: do I need home insurance when my house is still under construction?
The answer is yes. Just because your house isn’t finished yet doesn’t mean you don’t need to insure it. you have a lot of money invested in this property and you also have a lot of risk. You’ll still need to get insurance while your home is being built, but it’s not the same type of insurance you normally get on a home. A traditional homeowners insurance policy has additional coverage for personal property theft, something you probably don’t need when you’re building a home.
Builder’s risk insurance coverage is what you need to buy. this allows coverage to be in place if something happens to the home’s structure or other parts throughout the course of scheduled construction. Some insurance companies may offer a builder’s risk as a separate policy, but others may offer it as an endorsement to a homeowners policy. alfa® offers the builder’s risk as a backing to the homeowners policy, simplifying the transition to a homeowners policy once construction is complete. talk to your agent about this to better understand your policy needs.
what is builders risk insurance?
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There are many different types of builders risk insurance policies, but they are all intended to protect buildings while they are under construction. Builders hazard insurance is intended to help cover loss and damage on a construction site, which in turn can help protect your investment in the event of tragedy.
when to take out builders risk insurance?
If you’re wondering when a builders risk insurance policy should start, it’s even before construction begins. it is best to have a policy in place before the hammer hits the first nail. it is a mistaken notion that insurance is not needed until you are living in the home. The last thing a family should worry about when building a new home is what they would do if the structure broke down while construction was still underway.
Who is responsible for a builders risk policy?
Don’t assume your builder will have all the necessary insurance to protect your property. You, as the owner, will need to obtain coverage for your property while it is under construction. This will cover the structure in the event it needs repair or replacement after a loss due to a covered peril. Your contractor’s insurance typically doesn’t cover things like hurricanes, tornadoes, fires, and other natural disasters. your agent can help you determine the best coverage to meet your needs.
what is included in a builders risk policy?
Each insurance company and policy varies, so you’ll need to determine which policy meets your needs. it is common for builders risk policies to only include coverage for construction; however, it is very important that you also find liability coverage, whether you find a builders risk policy that includes liability coverage or obtain a separate liability policy.
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Imagine bringing your mother-in-law to see the progress of the new house. while she was on her property, she trips on a step and breaks her arm. who is responsible for that risk? you are. Or what if a neighborhood kid walks on your newly laid slab and gets a nail in his foot (or worse)? You could be facing large medical bills and maybe even a lawsuit, and liability coverage could help cover those costs.
The Alpha Builders Risk Endorsement has limited coverage for theft of materials or supplies owned by someone other than the insured. There is also a builders burglary risk endorsement that provides burglary coverage for a home under construction, but the home must be at a point where it is completely closed and can be locked.
once a build is complete, the builders risk policy can be changed to a regular homeowners policy for coverage of the home and finished belongings. your alfa® agent can answer any insurance questions you may have during the home building process. call today and get a free quote!