Updated: November 24, 2025
Advertising & Editorial Disclosure
Standard homeowners insurance may not cover new construction, especially if the home is unoccupied or being built from the ground up.
Builder's risk insurance covers new builds or long-term projects, while a dwelling under construction endorsement covers short-term renovations.
Review your policy with your insurer before construction to ensure adequate coverage and avoid protection gaps.
Standard homeowners insurance doesn't provide adequate protection during construction or major renovations. For new construction or extensive projects, you need builder's risk insurance. For shorter renovations, dwelling under construction endorsements work better.
Both coverages protect against theft, vandalism and property damage during construction but won't cover construction delays or faulty workmanship. Contact your insurer to determine coverage requirements before construction begins.
Insurance needs differ when you live in your home during renovations versus leaving the property vacant. With occupied homes, insurers offer more flexibility because occupancy reduces theft and unnoticed damage risks. Major structural changes or long-term projects require additional coverage. Tell your insurer whether you'll occupy the home during renovations so they can recommend appropriate coverage.
Dwelling under construction endorsements add short-term coverage to your homeowners policy. These endorsements protect against theft and damage during renovations like room additions or kitchen remodels. Without this coverage, your standard policy won't cover theft or damage during active construction.
Major structural changes or projects requiring you to move out trigger full construction periods. For these extensive projects, dwelling under construction endorsements prevent coverage gaps.
For projects lasting longer than a couple of months, especially full home builds, a separate builder’s risk policy is usually more appropriate.
A dwelling under construction endorsement adds protection for your property while it’s being built or renovated. While coverage varies significantly by insurer and policy, here are some protections that may be included:
A dwelling under construction endorsement may cover damage to both the existing home and new additions caused by covered perils like wind, fire or vandalism. Always check your policy to confirm what's included.
Coverage for personal belongings during construction may be limited. Items stored off-site or damaged by the renovation work itself might not be covered.
Liability coverage usually remains in effect, protecting you if someone is injured on your property during the renovation. But contractor injuries are typically not covered (they need their own insurance).
Some policies help cover temporary living expenses if construction damage makes your home uninhabitable. This coverage varies by insurer and isn't available with every endorsement.
Always review your specific policy documents to confirm what coverage applies to your situation.
Standard homeowners insurance (even with a dwelling under construction endorsement) excludes coverage for flooding, earthquakes and wear and tear. Know what isn't covered so you can plan for additional protection.
Homeowners insurance doesn't cover flood-related losses during construction. Buy a separate flood insurance policy to protect your property from flood damage, especially in high-risk areas.
Most homeowners policies exclude earthquake damage whether or not construction is happening. Buy a separate earthquake insurance policy if you're building or renovating in an earthquake-prone region.
Builder's risk insurance is temporary coverage for construction projects. Property owners or contractors buy this policy to protect against fire, theft and weather-related losses. Common coverage features:
Builder's risk insurance protects against fire, wind, theft, vandalism and other covered risks during construction.
Coverage protects materials on-site, in transit or temporarily stored off-site. Building supplies are insured from purchase until use in construction.
Coverage protects tools and construction equipment from theft, damage or other covered perils.
Builder's risk insurance covers scaffolding, temporary structures and construction forms.
Coverage pays for removing debris after a covered loss so the site can be cleared and work can resume.
Builder's risk insurance may cover architect fees, permits and construction loan interest from project delays caused by covered events.
Verify your contractor carries adequate insurance coverage, including liability and workers' compensation. With proper contractor insurance, you avoid financial liability for accidents or construction damage.
Builder's risk insurance doesn't cover employee thefts, design errors or mechanical breakdowns. Know what isn't covered so you can buy additional coverage. Exclusions include:
Losses from theft or dishonest acts by employees or subcontractors usually aren't covered. Buy a separate policy like fidelity insurance for internal theft.
Damage to materials and equipment from regular use or aging isn't covered. Builder's risk insurance covers unexpected events, not gradual deterioration of construction materials.
Builder's risk insurance doesn't cover defects or failures from poor-quality work or improper techniques. Hire reputable contractors and tradespeople.
Losses from mistakes in design, planning or engineering aren't covered. Buy professional liability insurance for architectural or engineering plan flaws.
Machinery failures or equipment breakdowns unrelated to covered perils like fire or vandalism usually aren't covered. Buy separate equipment insurance and maintain your equipment regularly.
Like dwelling under construction insurance, builder's risk doesn't cover faulty work quality, design errors or mechanical breakdowns. Plan ahead and choose a reputable contractor for financial protection.
Once construction is over, you'll still need to buy homeowners insurance. But don't just buy any policy. The best home insurance for new homes balances affordability with great coverage. Compare quotes from various providers to find the best and cheapest home insurance that fits your needs.
For a three-month kitchen remodel where you stay in your home, a dwelling under construction endorsement works well. For a nine-month ground-up build, buy builder's risk insurance.
Here's a quick guide to choosing between the two:
Best For | Short renovations (under 6 months) | New construction or major projects (6+ months) |
Project Type | Kitchen remodel, room addition, bathroom renovation | Ground-up builds, whole-house renovations, tear-downs |
Occupancy | You live in the home during work | Home is vacant or unlivable |
Cost | $100–$300 endorsement fee | 1–5% of construction costs |
Coverage | Limited to specific renovation areas | Entire structure plus materials |
Understanding coverage timing prevents gaps that leave your project exposed.
Both coverage types require you to transition to standard homeowners insurance once the construction is complete. Notify your insurer immediately when work is completed to avoid coverage lapses.
Renovations increase your home's value and introduce new risks. Update your coverage before construction begins to protect against damage, liability issues and unexpected costs.
Increase Coverage Limits | Raise your dwelling coverage to match your home's increased value after renovation. If you're adding a $50,000 kitchen, increase coverage by at least that amount. | Underinsurance leaves you paying out-of-pocket for losses that exceed your policy limits. |
Add Construction Coverage | For major projects, add a dwelling under construction endorsement or buy builder's risk insurance. | Standard policies won't cover theft of building materials or damage to unfinished structures during active construction. |
Verify Liability Protection | Confirm your liability coverage remains active during construction and that limits are adequate. | You're responsible if someone gets injured on your property. Most policies maintain coverage during renovations, but verification prevents gaps. |
Update Personal Property Coverage | Tell your insurer if you're storing furniture and belongings off-site or in a different part of your home during construction. | Some policies limit coverage for relocated items or items in storage during renovations. |
Review Policy Exclusions | Check what your policy doesn't cover during construction, including contractor errors, mechanical failures and certain weather events. | Identifying coverage gaps before construction begins lets you buy additional protection and avoid unexpected out-of-pocket costs. |
Before starting any construction or renovation project, adjust your home insurance policy to ensure adequate coverage for your home and new additions against potential risks. Timely adjustments protect your investment and provide comprehensive coverage throughout the construction process.
Skipping construction insurance exposes you to substantial financial losses from theft, damage and liability claims.
Construction sites attract thieves. Copper wiring, HVAC units, appliances and power tools are common targets. A single theft can cost $5,000 to $20,000. Without insurance, you'll pay to replace stolen items and face construction delays while waiting for new materials.
Unfinished structures lack complete protection from the elements. A storm can cause $10,000 to $50,000 in damage to exposed framing, materials and partially installed features. Fire damage during construction often totals the entire project cost. You'll pay for cleanup, debris removal and rebuilding without insurance coverage.
If a contractor, subcontractor or visitor gets injured on your property, you're liable for their medical costs and lost wages. A serious injury can result in lawsuits costing $50,000 to $500,000 or more. Your standard homeowners liability coverage may not apply during construction periods.
Most construction loans require proof of insurance before releasing funds. Without coverage, your lender may halt payments, impose expensive force-placed insurance or cancel your loan entirely. This stops your project and may cause you to lose your deposit and any completed work.
Homeowners policies don't cover construction work, especially on empty homes or ground-up builds. You'll need builder's risk insurance or a dwelling under construction endorsement to keep your project covered. Talk to your insurer before construction starts to avoid coverage gaps and protect your investment.
Construction insurance requirements vary by state and local area. Check with a licensed insurance agent for your area's requirements.
Planning construction on your home is exciting but complex. Here are common questions about homeowners insurance during construction.
Construction insurance is necessary during construction because it protects your home and new additions from fire, theft and vandalism. Construction creates vulnerabilities that require continuous coverage for completed structures and work in progress.
Standard homeowners insurance policies provide limited coverage for construction projects. Review your policy and add endorsements or buy additional coverage for full protection during construction.
Construction insurance covers fire, wind, theft and vandalism. Coverage varies by insurer, so confirm what your insurance provider covers before construction begins.
Construction projects often require additional insurance like builder's risk coverage. Builder's risk insurance covers materials, equipment and structures under construction.
Contact your insurance provider to discuss construction plans and adjust your coverage. Your insurer will recommend coverage adjustments and additional policies for your project.
About Mark Fitzpatrick
Mark Fitzpatrick, a Licensed Property and Casualty Insurance Producer, is MoneyGeek's resident Personal Finance Expert. With over five years of experience analyzing the insurance market, he conducts original research and creates tailored content for all types of buyers. His insights have been featured in publications like CNBC, NBC News and Mashable.
Fitzpatrick holds a master’s degree in economics and international relations from Johns Hopkins University and a bachelor’s degree from Boston College. He's also a five-time Jeopardy champion!
He writes about economics and insurance, breaking down complex topics so people know what they're buying.
