Home Insurance for Homes in Construction and Newly-Constructed Homes


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Updated: July 1, 2024

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When you're in the process of building a new house, builder's risk insurance is what you need to protect your investment during construction. Once your home is completed, homeowners insurance becomes essential to safeguard your home and personal belongings against risks and perils. Understanding the differences between these two types of insurance and knowing when to switch from one to the other can help you ensure comprehensive protection for your property.

Why Trust MoneyGeek? We gathered quotes and data from state insurance departments and Quadrant Information Services to identify the top homeowners insurance options for newly built homes, ensuring reliable data and industry standards support our recommendations.

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The home insurance rates mentioned represent the latest quotes as of June 2024.

Key Takeaways

If your home is under construction, you need builder’s risk insurance, but if it is newly constructed, you likely want home insurance.

Both builder’s risk insurance and homeowners insurance cover common perils such as fire, wind, theft, vandalism, hail, lightning, explosions and damage caused by vehicles.

The average annual cost to insure a newly constructed home is $1,415 for $250,000 in dwelling coverage with a $1,000 deductible, though rates can vary based on several factors.

Insurance When Building a New House: Builder’s Risk Insurance

If you're in the process of building a new house, builder's risk insurance is exactly what you need — it's a specialized type of property insurance designed to protect your home during construction. It provides coverage for:

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    Structure and Materials

    Coverage extends beyond the structure itself to include building materials, fixtures and equipment on-site or in transit to the construction site.

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    Faulty Design and Workmanship

    Some policies may cover losses due to faulty design, planning, workmanship or materials. These are typically additional policy endorsements rather than standard coverage.

A builder's risk policy can cover residential and commercial properties and is typically required by lenders and contractors before construction begins. Additionally, the coverage granted is temporary, usually lasting for the duration of the construction period, and protects against various risks that could cause damage or delay the project.

Insurance for Newly-Constructed Homes: Homeowners Insurance

If you have a newly constructed home, you want homeowners insurance to protect your investment. Homeowners insurance provides financial protection against disasters and other incidents that can damage your home or personal belongings. Homeowners insurance typically covers the following:

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    Dwelling Coverage

    Dwelling coverage pays to repair or replace the physical structure of your home, including walls, roof and built-in appliances.

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    Other Structures Coverage

    Other structures coverage pays to repair or replace the structures on your property that are not attached to your home, such as garages, sheds and fences.

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    Personal Property Coverage

    Personal property coverage protects your personal belongings, such as furniture, electronics and clothing.

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    Liability Coverage

    Liability coverage pays for legal fees and potential settlements if someone gets injured on your property or you accidentally cause damage to someone else’s property.

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    Additional Living Expenses (ALE)

    Additional living expenses, or loss of use coverage, pays for the cost of living elsewhere if your home is uninhabitable due to a covered loss. This includes hotel bills, restaurant meals and other necessary expenses.

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MONEYGEEK EXPERT TIP

Both builder’s risk insurance and homeowners insurance cover a range of perils, which typically includes, but is not limited to:

  • Fire: Protection against fire damage during the construction process or after it is built.
  • Wind: Coverage for damages caused by strong winds.
  • Theft: Protection against theft of building materials, equipment or personal belongings.
  • Vandalism: Coverage for intentional damage caused by vandals.
  • Hail: Protection against damage caused by hailstorms.
  • Lightning: Coverage for damages resulting from lightning strikes.
  • Explosion: Protection in case of explosions during or after construction.
  • Vehicles or Aircraft: Coverage if a vehicle or aircraft crashes into the construction site or your home.

Cost of Homeowners Insurance for Newly-Constructed Homes

The average cost to insure newly constructed homes is $1,415 annually for $250K in dwelling coverage with a $1,000 deductible. Note that this is just an average and that rates can still vary based on a number of factors, such as:

Coverage Levels
Location
Deductible
Home Construction Type
Credit Score
Claims History
Security Features
Age of Home

Generally, new homes are cheaper to insure due to modern construction standards, updated systems and built-in safety features. The following factors typically contribute to lower premiums:

  • Modern Building Codes: New homes are built according to current building codes, often including safety features and standards that reduce the risk of damage.
  • Updated Electrical and Plumbing Systems: New homes have modern electrical and plumbing systems that are less likely to fail and cause damage.
  • New Roofs and Structural Components: The structural integrity of a new home, including a new roof, reduces the risk of damage from weather and other perils.
  • Warranty Coverage: Many new homes come with builder warranties that can cover certain types of damage or defects, reducing the insurance risk.

In short, investing in your newly constructed home can ultimately result in lower home insurance premiums.

Best Homeowners Insurance for New Homes

We found that Erie is the best homeowners insurance provider for those with new homes, earning a MoneyGeek score of 92 out of 100. It offers an average annual premium of $1,178 for a house built in 2023, with $250K in dwelling coverage and a $1,000 deductible. This insurer is renowned for its excellent customer service, comprehensive coverage options and competitive rates, making it an ideal choice for homeowners seeking reliable and cost-effective insurance.

The table below highlights popular national insurers and average annual premiums.

ErieMoneyGeek Score (of 100)92Annual Premium$1,178
Auto-Owners InsuranceMoneyGeek Score (of 100)91Annual Premium$1,213
AmicaMoneyGeek Score (of 100)90Annual Premium$1,674
Concord Group InsuranceMoneyGeek Score (of 100)90Annual Premium$499
NationwideMoneyGeek Score (of 100)90Annual Premium$937
ChubbMoneyGeek Score (of 100)89Annual Premium$1,814
American FamilyMoneyGeek Score (of 100)88Annual Premium$1,190
AllstateMoneyGeek Score (of 100)83Annual Premium$1,258
FarmersMoneyGeek Score (of 100)83Annual Premium$1,482
TravelersMoneyGeek Score (of 100)82Annual Premium$2,705

Insurance Discounts for Newly-Constructed Homes

Newly constructed homes offer a variety of opportunities to save on home insurance premiums. Here are some discounts you may be able to take advantage of:

  • New Home Discount: You may qualify for a discount if your home is newly constructed. New homes are built with the latest building codes and safety standards, lowering insurers' risk.
  • Home Security Discount: Installing various security devices can lead to significant savings. Devices like fire extinguishers, smoke alarms and burglar alarms reduce the risk of damage and theft, making your home safer and less expensive to insure. Advanced tech and safety features that help mitigate risks can also contribute to lower premiums.
  • Roofing Discounts: Your roof's age and material can impact your insurance costs. New roofs, especially those made of durable materials, are less likely to suffer damage and can qualify for discounts. Investing in a high-quality, long-lasting roof can lead to lower insurance premiums.

Overall, insurance companies often provide specific discounts for new homes due to their modern features and reduced risk factors. Contact your insurer and inquire about potential discounts to lower premiums on your newly built home.

About Mark Fitzpatrick


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Mark Fitzpatrick has analyzed the property and casualty insurance market for over five years, conducting original research and creating personalized content for every kind of buyer. Currently, he leads P&C insurance content production at MoneyGeek. Fitzpatrick has been quoted in several insurance-related publications, including CNBC, NBC News and Mashable.

Fitzpatrick earned a master’s degree in economics and international relations from Johns Hopkins University and a bachelor’s degree from Boston College. He is passionate about using his knowledge of economics and insurance to bring transparency around financial topics and help others feel confident in their money moves.