Finance Lifestyle

What to Keep in Mind About Insurance When Building a Home


The decision to build a home gives you the chance to customize the space. However, as you search for a building site or a piece of land, make sure to check with your insurance professional to find out if your project can be insured. If you struggle to get insurance because of flooding concerns or other challenges, your building project may soon become a nightmare.

Get Insurance Before You Start Building

While land shopping and reviewing neighborhoods, check with your insurance professional to see the insurance rates for the neighborhood you’re looking at. Also, check out the construction styles of houses in the area. For example, in some regions, houses with wooden shingles are nearly impossible to insure. Include that information in your construction plan. Do you plan to work from home or to own a home-based business? This decision can impact your ability to get insurance. If you’ve never had homeowner’s insurance, talk to the company that covers your car, or speak to people in the neighborhood you plan to move into.

Builder’s Insurance

Your builder needs to carry a wide variety of insurance policies, including liability and workmen’s compensation. It would be a mistake not to view these policies and to check out the builder with local business monitoring groups. You should also check references. In addition, you builder will need to buy supplies for the project, pay for those supplies as the builder gets paid, and collect lien releases. Make sure you have copies of all lien releases so suppliers can’t come back to you for payment. When looking into builder’s insurance, keep in mind the different types of policies to consider so you can get the coverage you want. Your builder’s insurance will cover his risk, such as vandalism or weather damage during the construction process. However, if you have any of your own tools or other belongings on-site, your builder’s insurance may not cover those losses.

Get Replacement Coverage

Building a house can be a daunting expense. If you find an Actual Cash Value or ACV insurance policy that looks like a good deal, understand that it isn’t a good long-term option. ACV policies will replace new things when they are new. However, a ten-year-old roof is worthless, and your ACV policy won’t cover the new roof you will still need after a hailstorm. Instead of an ACV policy, try to incorporate building materials that will be cheaper to insure over the long run, such as hail-resistant shingles and home security alarm systems.

Insurance doesn’t have to be worrying if you shop smart. It’s being too eager or overly excited and making decisions that can lead to uninsurable land purchases or very expensive homeowner’s policies. To protect yourself, contact your insurance agent before you sign anything or pay any earnest money.

If you’re looking to purchase a house, check out this slideshow article for things you should consider before doing so.

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