Shortcut Navigation:

I'm building a new home. Do I need to insure it while it's under construction? If so, how can I do this?

You should definitely insure your new home during its construction. If you don't, you're exposing yourself to a great deal of risk if fire, theft, or another event damages or destroys your partially completed home.

One way to cover your new home during construction is by purchasing a standard homeowners policy. This will cover you for any damage to the building as it's being built and may provide some coverage for theft of building supplies (although the contractor's insurance should also cover this). A homeowners policy also provides liability coverage, which may come in handy if one of your friends trips during a tour of your dream house and decides to sue you. However, the policy will not cover your personal property until the building is secure or lockable. After construction reaches this point, you can add on coverage for your personal property.

Another option is to purchase a dwelling and fire policy. This type of policy covers damage to the physical structure but provides no theft coverage. A dwelling and fire policy may be an appropriate choice if you are living in your old house during construction, because the homeowners policy on that house would cover theft of items from the construction site. Dwelling and fire policies also provide liability coverage, just like a standard homeowners policy.

When the building is complete, you should re-evaluate your coverage. If you opted for dwelling and fire coverage, you'll need to purchase a full homeowners policy. If you bought standard homeowners insurance, make sure you have purchased an adequate amount, especially if you've made alterations to the original building plans by adding on a room or upgrading the building.