Builder's risk insurance protects a property during construction, and it's required by most lenders and contractors before work begins. Coverage is temporary, lasting the duration of the build, and applies to both residential and commercial properties. It covers:
New Construction Insurance for Homeowners
Updated: March 22, 2026
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Key Takeaways
If your home is under construction, you need builder’s risk insurance, but if it is newly constructed, you need 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.
If you have a newly-built home, the best homeowners insurance is from AIG Insurance, which costs an average of $75 per month.
Insurance When Building a New House: Builder’s Risk Insurance
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.
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.
Insurance for Newly-Constructed Homes: Homeowners Insurance
Homeowners insurance protects your new construction investment against damage to the structure, personal belongings and other covered incidents. Standard coverage includes:
Dwelling Coverage
Dwelling coverage pays to repair or replace the physical structure of your home, including walls, roof and built-in appliances.
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.
Personal Property Coverage
Personal property coverage protects your personal belongings, such as furniture, electronics and clothing.
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.
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.
MONEYGEEK EXPERT TIP
Both builder’s risk insurance and homeowners insurance cover a range of perils, which 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.
Average Cost of Home Insurance for New Constructions
New construction home insurance averages $2,379 per year for $250,000 in dwelling coverage with a $1,000 deductible. Rates by coverage limit are:
| $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 |
Best Home Insurance for New Constructions
AIG is the top pick for new construction home insurance at $75 per month ($904 per year). Military members, veterans and eligible family members get the best rates through USAA at $111 per month.
| USAA | $111 | $1,331 | 1 |
| AIG Insurance | $75 | $904 | 2 |
| Amica | $79 | $954 | 3 |
| CSAA | $88 | $1,052 | 4 |
| AAA | $104 | $1,248 | 5 |
Insurance Discounts for Newly-Constructed Homes
Newly constructed homes offer a variety of opportunities to save on home insurance premiums. Some discounts to take advantage of include:
New Home | Homes built within the last few years meet current building codes and safety standards, which lowers the insurer's risk. Most insurers offer 5% to 15% off for homes less than 10 years old. |
Home Security | Installing smoke alarms, burglar alarms and fire extinguishers reduces the risk of damage and theft. Smart home devices like water leak sensors and monitored security systems can lower premiums even more. |
Roofing | A new roof made of durable materials like impact-resistant shingles or metal is less likely to suffer storm damage. Many insurers offer discounts for roofs less than five years old or built with Class 4 impact-rated materials. |
Updated Systems | Homes with recently upgraded electrical, plumbing and HVAC systems are less prone to fires, water damage and other costly claims. Insurers often discount policies when all three systems have been updated within the last 10 to 15 years. |
Wind Mitigation | New construction that includes hurricane straps, reinforced garage doors and impact-resistant windows can qualify for wind mitigation credits, especially in coastal states like Florida and Texas. |
Building Code Compliance | Some insurers offer credits for homes built to exceed minimum local building codes. Features like reinforced framing, elevated foundations and fire-resistant siding may qualify. |
Smart Home Technology | Connected devices like automatic water shutoff valves, smart thermostats and leak detection systems help prevent claims before they happen. Several insurers, including American Family and Nationwide, offer discounts for verified smart home setups. |
Homeowners Insurance for New Construction: Bottom Line
Builder's risk insurance covers your property during construction. Once the build is complete, you switch to homeowners insurance to protect the structure and your belongings against ongoing risks. Knowing when to make that transition keeps your coverage continuous.
Insurance for New Construction: FAQ
We've answered common questions about insuring a newly built home and getting the best rates on your policy.
Do I need homeowners insurance before closing on a new build?
Yes. Most lenders require proof of coverage before closing. Bind your policy at least two to four weeks before your closing date.
Does my builder's insurance cover me during construction?
No. A builder's risk policy covers the structure during construction. Your belongings and liability are not included. Get your own homeowners policy before taking ownership.
What discounts should I ask about for a newly built home?
Ask about new home, wind mitigation, updated systems, smart home and roofing discounts. Bundling home and auto with the same insurer saves an additional 10% to 20%.
What type of home insurance do I need as a first-time buyer?
Most lenders require a standard HO-3 policy before closing. New construction first-time home buyers often pay lower premiums than buyers of older homes (updated materials and current building codes mean fewer claims).
New Construction Home Insurance: Related Articles
Rates and insurer data were sourced from state insurance departments and Quadrant Information Services.
The homeowner we profiled:
- Age: 41 to 60 years old
- Credit score: 769 to 792 (excellent range)
- Claims history: None in recent years
This represents the typical American homeowner most insurers consider low-risk. Your rates will differ if you're younger, have lower credit scores or filed recent claims, but this baseline shows what standard pricing looks like.
The home we insured:
- Built: 2020
- Construction: Wood-frame with composite shingle roof
- Safety features: Standard (smoke detectors, deadbolts)
- Replacement value: $250,000
Standard coverage package:
- $250,000 dwelling coverage
- $125,000 personal property coverage
- $200,000 personal liability coverage
- $1,000 deductible
Your actual premium depends on your home's age, construction quality, claims history and exact coverage limits, but our analysis reveals whether you're getting a good rate or paying more than necessary.
Reviews Methodology
To determine the top home insurance companies in various categories, MoneyGeek developed a unique scoring system. This system used premium data from companies available in, on average, over 35 states.
MoneyGeek’s rankings were based on nationally recognized data from top consumer reporting agencies, including J.D. Power for customer service, AM Best for financial stability and Quadrant Information Services for affordability. Each factor was rated on a scale of 1 to 5 and weighted according to its importance, with a strong focus on affordability. These ratings were combined to create a comprehensive score out of 100. Depending on the category, we adjusted pricing information based on the specific factor or state being analyzed.
About Mark Fitzpatrick
Mark Fitzpatrick, a Licensed Property and Casualty Insurance Producer, is MoneyGeek's resident Personal Finance Expert. He has analyzed the insurance market for over five years, conducting original research for insurance shoppers. His insights have been featured in 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.