Homeowners insurance is built for a finished, occupied home, which means it doesn't cover homes under construction. Once construction begins, three specific exclusions tend to apply simultaneously: theft of uninstalled materials, major structural alterations and the vacancy clause.
Do You Need Homeowners Insurance During Construction?
Updated: September 1, 2026
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Key Takeaways
Homeowners insurance doesn't cover homes under construction, which means your structure and building materials aren't financially protected once a project begins.
A dwelling under construction endorsement works for short, contained renovations, but doesn't cover theft of materials or provide protection for soft costs if the project is delayed.
For major renovations, projects requiring you to move out or new home builds, a separate builders risk policy is the better fit since it financially protects the structure and materials from fire, theft and weather through project completion.
Does Homeowners Insurance Cover a Home Under Construction?
Theft of Uninstalled MaterialsHome insurance policies don't cover theft of materials that haven't been permanently installed yet. Lumber, copper piping, fixtures and appliances sitting on your property or in storage have no protection until they're actually built into the structure. This applies even if those materials represent $30,000 in pre-ordered cabinetry sitting in your garage.
Major Structural AlterationsYour homeowners insurance policy is not designed to cover a structure undergoing fundamental changes. Removing load-bearing walls, underpinning the foundation, or raising the roof introduces construction-zone risk that most carriers specifically exclude. Any collapse during renovation, damage from the construction process itself, and losses tied to faulty workmanship are all excluded even if you've notified your insurer.
Vacancy ClauseIf you move out during construction, most policies suspend coverage for vandalism, water damage and glass breakage after 30 to 60 consecutive days of vacancy, depending on the carrier. A major renovation that keeps you away from home past your provider's limit will trigger that suspension.
What Is a Dwelling Under Construction Endorsement?
A dwelling under construction endorsement adds to your existing homeowners policy to prevent coverage suspension while the home sits empty during a renovation. It fits shorter projects, generally ones expected to finish within a month or two, and can extend coverage for 90 to 180 days depending on the provider.
Most policies stop covering vandalism, water damage and glass breakage after 30 to 60 consecutive days of vacancy. This endorsement keeps those protections active for the length of the project. A burst pipe or a break-in during construction stays covered under your standard policy.
WHAT DWELLING UNDER CONSTRUCTION DOESN'T COVER
It doesn't cover theft of materials that haven't been installed yet, materials being transported to the site, or soft costs like loan interest and permit fees caused by a project delay. It's cheaper than a standalone policy, but the coverage is narrower.
What Does Builders Risk Insurance Cover?
Builders risk insurance, also called course of construction insurance, is a standalone policy built for construction sites from the ground up. It covers the structure being built, materials on-site and materials in transit or stored off-site from fire, wind, lightning, hail, theft, vandalism and explosions.
Policies are sold in three-, six-, nine- or twelve-month terms. The limit is set at the project's total estimated completed value, not the home's current value before construction. A major addition can raise the rebuild cost well above what the home was worth going in, which is why that distinction matters. Soft costs, including loan interest and permit fees that pile up when a covered loss delays the project, can be added as an optional endorsement.
WHAT BUILDERS RISK INSURANCE DOESN'T COVER
Builders risk insurance doesn't cover liability. If someone is injured at your construction site, you need separate coverage for that gap. Your contractor's general liability policy covers the contractor's own work, not you as the property owner. Confirm what liability coverage is in place before construction starts.
Dwelling Endorsement vs. Builder's Risk: Which Do You Need for Construction?
Coverage needs for a home under construction depend on project length and whether the home stays occupied during work.
Vacancy protection | Yes | Yes (built for vacant sites) |
Theft of uninstalled materials | No | Yes |
Materials in transit to site | No | Yes |
Materials at off-site storage | No | Yes |
Soft costs (loan interest, permit fees) | No | Optional add-on |
Liability coverage | No | No (separate policy needed) |
Typical policy term | Ongoing with homeowners policy | 3 to 12 months |
Call your insurer before construction starts. Some carriers require advance notice when major work begins. Skipping that call can give the insurer grounds to deny a claim, even with the right coverage in place.
DON'T FORGET TO BUY HOME INSURANCE AFTER CONSTRUCTION
Once construction wraps up, you'll need a standard homeowners policy, and choosing the right one matters. The best home insurance for new homes balances affordability with strong coverage. Compare quotes from multiple providers to find the cheapest home insurance that still meets your coverage needs.
What Happens if You Skip Home Insurance During Construction?
Without construction insurance, theft, damage and liability claims come out of your own pocket.
- 1Theft of Materials and Equipment
Construction sites attract theft. Copper wiring, HVAC units and power tools are the most common targets. Once thieves know materials are staged and the site is empty at night, the same location can be hit more than once. A project without overnight security can sustain multiple theft events before it's done. Without insurance, you pay for each one.
- 2Fire and Weather Damage
Unfinished structures aren't protected from rain, wind or fire the way a finished home is. Damage to exposed framing or an open roof can be costly to fix. Fire during construction is especially serious because sprinklers aren't installed yet.
- 3Liability for Injuries
If a contractor, subcontractor or visitor gets hurt on your property, you may be responsible for their medical bills and lost wages. Your standard homeowners liability coverage may not apply during active construction. A serious injury can lead to a lawsuit.
- 4Lender Requirements
Most construction loans require proof of insurance before the lender releases funds. If you're missing that coverage, your lender can pause payments, add expensive force-placed insurance or cancel the loan entirely.
Construction Insurance for Homeowners: Bottom Line
A standard homeowners policy wasn't written for homes under construction. If you plan to renovate, short cosmetic renovations while staying in the home are fine with a dwelling under construction endorsement on your existing policy. Any project lasting more than two months, requiring you to move out or involving a large volume of uninstalled materials on-site calls for builders risk insurance instead.
Home Insurance During Construction: FAQ
Standard homeowners insurance doesn't cover damage caused by faulty workmanship, and it excludes theft of materials that haven't been installed yet. Some perils like fire may still be covered during a project, but the exclusions are specific enough that most renovations of any real size warrant a conversation with your insurer before work begins.
Either party can purchase it, but owner-purchased policies give you direct authority over the claims process and settlement negotiations. If your contractor holds the policy and walks off the job or misses a payment, coverage can disappear with them, leaving you without protection mid-project.
It depends on the carrier. Some builders risk policies terminate coverage the moment you move in. Others allow occupancy with a specific endorsement. Disclose your living arrangements upfront so the policy terms match your actual situation from day one.
Construction projects often require additional insurance like builder's risk coverage. Builder's risk insurance covers materials, equipment and structures under construction.
Soft costs are financial losses caused by a construction delay that aren't the cost of physical repairs. If a fire delays your project by four months, hard costs cover fixing the damage. Soft costs cover the loan interest, permit renewal fees, and carrying expenses that pile up during that delay. A standard homeowners policy doesn't cover these. Builders risk can include them as an optional add-on.
About Mark Fitzpatrick
Mark Fitzpatrick is a licensed Property and Casualty (P&C) Insurance Producer in Connecticut and MoneyGeek's resident expert in insurance and economics. In nearly a decade covering the insurance market at LendingTree and MoneyGeek, he's analyzed hundreds of carriers and millions of rates across auto, home, renters, health and life insurance.
His work has appeared in The Washington Post, The New York Times and NPR. He draws on independent cost and consumer experience data, and no insurance company partnerships affect his recommendations.
Mark studied at Boston College and later earned a master's in economics and international relations from Johns Hopkins University. He worked in financial risk management at State Street before joining MoneyGeek. He's also a five-time “Jeopardy!” champion.