Homeowners insurance costs for new construction average $2,379 per year for $250,000 in dwelling coverage with a $1,000 deductible. Higher or lower limits can affect home insurance premiums by an average of $6,192 per year.
Homeowners Insurance Cost for New Construction
Updated: September 21, 2026
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Key Takeaways
New construction homeowners insurance averages $198 per month ($2,379 per year) for $250,000 in dwelling coverage with a $1,000 deductible.
AIG offers the most affordable rates for new homes at $75 per month for $250,000 in dwelling coverage, with Amica offering the next-best rates at $79 per month.
Average premiums for new construction scale from $103 a month for $100,000 in dwelling coverage to $478 a month for $1 million in dwelling coverage. The coverage limit you choose drives most of the price difference.
Average Cost of Home Insurance for New Construction
| $100K Dwelling / $50K Personal Property / $100K Liability | $103 | $1,238 |
| $250K Dwelling / $125K Personal Property / $200K Liability | $198 | $2,379 |
| $500K Dwelling / $250K Personal Property / $300K Liability | $336 | $4,038 |
| $750K Dwelling / $375K Personal Property / $500K Liability | $478 | $5,741 |
| $1MM Dwelling / $500K Personal Property / $1MM Liability | $619 | $7,430 |
Across the coverage levels shown, monthly premiums increase by $95 to $142 at each step. For most new construction homeowners, the goal isn't the lowest tier. It's the tier that matches the home's replacement cost, what the insurer would pay to rebuild the property if it were destroyed.
Purchase price and replacement cost are often different numbers. Homeowners who base their coverage limit on what they paid, rather than what it would cost to rebuild, are more likely to end up underinsured. It's one of the most common mistakes among new construction buyers.
Best Cheap Home Insurance Companies for New Construction
At $250,000 in dwelling coverage, AIG offers the best home insurance for new homes at $75 per month or $904 per year. For military members and their dependents, USAA offers exclusive coverage and is the best option at $1,331 per year.
Rates can change by coverage level and provider. Compare home insurance quotes below to find cheap home insurance that meets the requirements of your new home.
Data filtered by:
$250K Dwelling / $125K Personal Property / $200K Liability
| AIG Insurance | $75 | $904 | 4.76 |
| Amica | $79 | $954 | 4.75 |
| CSAA | $88 | $1,052 | 4.57 |
| AAA | $104 | $1,248 | 4.52 |
| USAA | $111 | $1,331 | 4.85 |
| State Farm | $126 | $1,514 | 4.5 |
| Nationwide | $139 | $1,663 | 4.24 |
| Farmers | $161 | $1,928 | 4.3 |
| Homesite | $161 | $1,937 | 4.13 |
| American Modern | $163 | $1,952 | 3.86 |
| Allstate | $180 | $2,155 | 4.16 |
| Progressive | $264 | $3,173 | 3.83 |
| Travelers | $276 | $3,317 | 3.68 |
| Chubb | $292 | $3,498 | 4.28 |
Newly constructed homes carry lower claim risks compared to older homes, but not every provider weighs that risk the same way. The factors that affect your premium, including location, home features and credit score, are weighted differently by insurer to insurer. How these factors are weighed isn't shared by providers, which is why getting quotes from multiple providers is what tells you which carrier has priced that lower-risk profile most in your favor.
EXPLORE THE BEST HOME INSURANCE FOR NEW CONSTRUCTION
Why New Construction Homes Cost Less to Insure
New construction homes cost less to insure because current building codes set higher standards for fire, wind and water resistance than older versions, and new homes are built to meet them. Older homes carry the risks that come with age. Systems deteriorate over time, and materials in older homes often weren't built to those same standards. Insurers price based on expected claim likelihood, so a home without those accumulated risks costs less to cover.
WHEN INSURANCE COSTS MAY BE HIGHER FOR NEW CONSTRUCTION
Custom materials and luxury finishes push replacement cost estimates higher, which raises premiums. Location affects cost too. Coastal, wildfire-prone and flood-zone homes cost more to insure no matter how old they are. Square footage adds to the cost as well. Larger homes need higher dwelling coverage limits, so they pay higher premiums.
Other Factors Affecting New Construction Home Insurance Costs
New construction homes start with a lower baseline premium. From there, factors like materials, location and square footage determine the final cost. Homeowners who know these variables can better estimate what they will pay and where they might cut costs.
Home Value and Coverage LimitsHigher dwelling coverage directly raises premiums. Insuring a $1 million home costs more than insuring a $250,000 home, even when both are newly built.
Location and Risk ExposureWeather risk, crime rates and local rebuild costs all shape pricing. Coastal and wildfire-prone areas carry higher premiums no matter how old the home is.
Deductible SelectionA higher deductible lowers the monthly premium. It also means paying more out of pocket after a claim, so adjusting the deductible is one of the most direct ways to change the rate.
- Home Features and Materials
Fire-resistant materials, new plumbing and updated wiring lower the insurer's risk. Homes with these upgrades often get better rates than homes with older systems.
Credit Score and Claims HistoryInsurers weigh both credit score and claims history when pricing a policy. Good credit and a clean claims record often mean a lower premium.
Ways to Lower the Cost of New Construction Home Insurance
New construction already carries a cost advantage over older homes. Homeowners can lower premiums further by making a few targeted changes.
Bundle PoliciesCombining home and auto policies can qualify homeowners for multi-policy discounts. Many insurers offer 5% to 15% savings on bundled policies.
Increase Your DeductibleThe average home insurance deductible is $1,000, but raising it to $2,000 can lower the premium by an average of $329 a year. Choose a deductible amount you can afford to pay out of pocket after a loss.
Install Safety FeaturesSecurity systems, smoke detectors and smart home technology lower the insurer's risk assessment. Insurers often reward these upgrades with premium discounts.
Shop Multiple QuotesPrices vary widely between insurers for new construction homes. Getting quotes from at least three insurers helps homeowners find the lowest rate for their coverage needs.
- Maintain Good Credit
Better credit scores often mean lower premiums in most states. Credit score is a major factor in how insurers price a homeowners policy.
Homeowners Insurance Cost for New Construction: Bottom Line
New construction homeowners insurance offers a cost advantage. Newer materials, modern systems and reduced claim risk drive premiums lower. Costs still vary based on coverage limits, location and home features, and higher-value or high-risk properties push premiums back up. Getting quotes from multiple insurers and adjusting factors like the deductible or bundling policies can lower costs further. Even with lower baseline rates, homeowners should review their coverage details so the policy matches the home's true replacement cost and risk exposure.
What You’ll Pay for New Construction Home Insurance: FAQ
Yes, new homes cost less to insure due to lower risk, with average premiums around $198 per month for $250,000 in dwelling coverage.
Insurance averages $2,379 per year for $250,000 in coverage, with costs ranging from $1,238 per year for $100,000 homes to $7,430 per year for $1 million homes.
Standard homeowners insurance does not cover construction defects, faulty workmanship or builder errors. These issues fall under the builder's warranty or a separate structural warranty, not a standard homeowners policy.
Coverage limits, location, home features, deductible and credit history all influence premiums, with higher coverage levels pushing costs up the most.
Lenders require homeowners insurance on any home with a mortgage, including new construction. You will need to provide proof of coverage before closing, and the dwelling coverage amount must at least equal the loan balance.
Rates and insurer data were sourced from state insurance departments and Quadrant Information Services. MoneyGeek's rankings were based on nationally recognized data from J.D. Power, AM Best and Quadrant Information Services, each rated on a scale of 1 to 5, with affordability prioritized in the final score.
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.