Do You Need Homeowners Insurance During Construction?

When your home is under construction (whether you’re building from the ground up or renovating), standard homeowners insurance may not provide enough protection. You’ll typically need one of two options: builder's risk insurance for new or long-term projects, or a dwelling under construction endorsement for shorter renovations. Both help cover risks like theft, vandalism and property damage during the build.

Talk to your insurer to confirm which type of coverage fits your project and whether your existing policy needs to be updated.

Home under construction insurance, or a dwelling under construction endorsement, is an add-on to your homeowners policy designed for short-term projects. It provides protection during renovations or minor builds that typically last a few weeks (like adding a room or remodeling a kitchen). Without this endorsement, your standard policy may not cover theft or damage while the home is under active construction.

If your project requires you to move out or involves major structural changes, your insurer may consider it a full construction period. In that case, you may need this endorsement to avoid 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 by insurer, here are some common protections typically included with this endorsement:

Standard homeowners insurance (even with a dwelling under construction endorsement) has coverage gaps. Perils like flooding, earthquakes, and wear and tear are typically excluded. Knowing what isn't covered helps you plan for additional protection.

Builder's risk insurance is temporary coverage designed specifically for construction projects. Property owners or contractors typically purchase this policy to protect against fire, theft and weather-related losses. Common coverage features include:

Builder's risk insurance doesn't cover everything, such as employee thefts, design errors or mechanical breakdowns. Understanding what isn't covered ensures you can purchase additional coverage for all your risks. Builder's risk insurance costs don't cover:

Like dwelling under construction insurance, builder's risk doesn’t cover faulty workmanship, design errors or mechanical breakdowns. Planning ahead for such instances and choosing a reputable contractor can ensure financial protection on all fronts.

Renovations can increase the value of your home and introduce new risks, making it essential to update your coverage. Proper changes to your home insurance can safeguard against potential damages, liability issues and unexpected costs. Typical policy adjustments for a smooth and secure renovation process include:

Homeowners policies usually don't cover construction work, especially on empty homes or ground-up builds. Depending on your project, you may need builder’s risk insurance or a dwelling under construction endorsement to stay protected. Talk to your insurer before construction begins to avoid gaps in coverage and safeguard your investment.

Planning construction on your home can be an exciting but complex process, and understanding how it impacts homeowners insurance is vital. We address some common questions about homeowners insurance during construction to help you navigate this important aspect of your renovation or building plans.

MoneyGeek analyzed quotes from multiple insurance providers across the U.S. using a profile that reflects the average homeowner. By considering different locations and companies, we aim to give a reliable estimate of what homeowners can expect to pay — showing why it’s important to compare rates. 

Homeowner Profile

For our analysis, we created a sample homeowner profile with the following characteristics:

• Good credit score (769–792)
• Home constructed in 2000
• Wood-frame construction
• Composite shingle roof

Homeowners Insurance Coverage Details

Unless otherwise specified, we used the following coverage limits to collect quotes for our comparison:

• $250,000 in dwelling coverage
• $125,000 in personal property coverage
• $200,000 in personal liability coverage
• $1,000 deductible

We also compiled data for policies with broader coverage to determine the best companies for insuring expensive homes, upping limits to $1 million in dwelling coverage, $500,000 in personal property coverage and $1 million in liability coverage.