Home Insurance for Homes in Construction and Newly-Constructed Homes
Updated: August 13, 2024
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When you're in the process of building a new house, builder's risk insurance is what you need to protect your investment during construction. Once your home is completed, homeowners insurance becomes essential to safeguard your home and personal belongings against risks and perils. Understanding the differences between these two types of insurance and knowing when to switch from one to the other can help you ensure comprehensive protection for your property.
Why Trust MoneyGeek? We gathered quotes and data from state insurance departments and Quadrant Information Services to identify the top homeowners insurance options for newly built homes, ensuring reliable data and industry standards support our recommendations.
The home insurance rates mentioned represent the latest quotes as of June 2024.
If your home is under construction, you need builder’s risk insurance, but if it is newly constructed, you likely want home insurance.
Both builder’s risk insurance and homeowners insurance cover common perils such as fire, wind, theft, vandalism, hail, lightning, explosions and damage caused by vehicles.
The average annual cost to insure a newly constructed home is $1,415 for $250,000 in dwelling coverage with a $1,000 deductible, though rates can vary based on several factors.
If you're in the process of building a new house, builder's risk insurance is exactly what you need — it's a specialized type of property insurance designed to protect your home during construction. It provides coverage for:
Structure and Materials
Coverage extends beyond the structure itself to include building materials, fixtures and equipment on-site or in transit to the construction site.
Faulty Design and Workmanship
Some policies may cover losses due to faulty design, planning, workmanship or materials. These are typically additional policy endorsements rather than standard coverage.
A builder's risk policy can cover residential and commercial properties and is typically required by lenders and contractors before construction begins. Additionally, the coverage granted is temporary, usually lasting for the duration of the construction period, and protects against various risks that could cause damage or delay the project.
If you have a newly constructed home, you want homeowners insurance to protect your investment. Homeowners insurance provides financial protection against disasters and other incidents that can damage your home or personal belongings. Homeowners insurance typically covers the following:
Dwelling Coverage
Dwelling coverage pays to repair or replace the physical structure of your home, including walls, roof and built-in appliances.
Other Structures Coverage
Other structures coverage pays to repair or replace the structures on your property that are not attached to your home, such as garages, sheds and fences.
Personal Property Coverage
Personal property coverage protects your personal belongings, such as furniture, electronics and clothing.
Liability Coverage
Liability coverage pays for legal fees and potential settlements if someone gets injured on your property or you accidentally cause damage to someone else’s property.
Additional Living Expenses (ALE)
Additional living expenses, or loss of use coverage, pays for the cost of living elsewhere if your home is uninhabitable due to a covered loss. This includes hotel bills, restaurant meals and other necessary expenses.
Both builder’s risk insurance and homeowners insurance cover a range of perils, which typically includes, but is not limited to:
The average cost to insure newly constructed homes is $1,415 annually for $250K in dwelling coverage with a $1,000 deductible. Note that this is just an average and that rates can still vary based on a number of factors, such as:
Higher coverage limits generally result in higher premiums.
Homes in areas prone to natural disasters or high crime rates can have higher premiums.
Choosing a higher deductible can lower your premium but means you'll pay more out-of-pocket in the event of a claim.
The materials and methods used in building your home can affect premiums; for example, homes built with fire-resistant materials may cost less to insure.
In most states, your credit score can affect your premium, with higher scores typically leading to lower premiums. However, California, Maryland, Massachusetts and Hawaii have banned insurers from using credit scores to determine rates.
Your premiums may be higher if you have a history of filing claims.
Homes with security systems, smoke detectors and other safety features may qualify for discounts.
Older homes might have higher premiums since they often come with an increased risk of outdated systems and materials.
Generally, new homes are cheaper to insure due to modern construction standards, updated systems and built-in safety features. The following factors typically contribute to lower premiums:
In short, investing in your newly constructed home can ultimately result in lower home insurance premiums.
We found that Erie is the best homeowners insurance provider for new homes, earning a MoneyGeek score of 92 out of 100. It offers an average annual premium of $1,178 for a house built in 2023, with $250K in dwelling coverage and a $1,000 deductible. This insurer is renowned for its excellent customer service, comprehensive coverage options and competitive rates, making it an ideal choice for homeowners seeking reliable and cost-effective insurance.
The table below highlights popular national insurers and average annual premiums.
| Erie | MoneyGeek Score (of 100)92 | Annual Premium$1,178 |
| Auto-Owners Insurance | MoneyGeek Score (of 100)91 | Annual Premium$1,213 |
| Amica | MoneyGeek Score (of 100)90 | Annual Premium$1,674 |
| Concord Group Insurance | MoneyGeek Score (of 100)90 | Annual Premium$499 |
| Nationwide | MoneyGeek Score (of 100)90 | Annual Premium$937 |
| Chubb | MoneyGeek Score (of 100)89 | Annual Premium$1,814 |
| American Family | MoneyGeek Score (of 100)88 | Annual Premium$1,190 |
| Allstate | MoneyGeek Score (of 100)83 | Annual Premium$1,258 |
| Farmers | MoneyGeek Score (of 100)83 | Annual Premium$1,482 |
| Travelers | MoneyGeek Score (of 100)82 | Annual Premium$2,705 |
Newly constructed homes offer a variety of opportunities to save on home insurance premiums. Here are some discounts you may be able to take advantage of:
Overall, insurance companies often provide specific discounts for new homes due to their modern features and reduced risk factors. Contact your insurer and inquire about potential discounts to lower premiums on your newly built home.
About Mark Fitzpatrick
Mark Fitzpatrick is a Licensed Property and Casualty Insurance Producer and MoneyGeek's Head of Insurance. He has analyzed the insurance market for over five years, conducting original research and creating personalized content for every kind of buyer. He has been quoted in several insurance-related publications, including CNBC, NBC News and Mashable.
Fitzpatrick earned a master’s degree in economics and international relations from Johns Hopkins University and a bachelor’s degree from Boston College. He is passionate about using his knowledge of economics and insurance to bring transparency around financial topics and help others feel confident in their money moves.
