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Written by Joshua Cox-Steib Joshua Cox-Steib
Edited by Mariah Posey Mariah Posey
Updated Mar 14, 2024
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On This Page
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- Insuring new construction homes
- Home insurance coverage types for new construction
- How much does home insurance cost for new construction?
- New construction home discounts
- Frequently asked questions
If you’re in the process of building a new home, you may have a builder’s risk insurance policy or new construction insurance. This might also be the best time to search for a homeowners insurance policy, as you’ll need one before you move in. Fortunately, you may qualify for certain discounts on your homeowners insurance policy when your home is new, such as for modern safety features like security systems. Newer homes also generally have lower insurance rates than older homes due to the quality of construction materials used and the decreased likelihood of claims. Bankrate’s insurance experts can help you understand your options by explaining coverage for residential new construction, providing an overview of the average cost of a policy and the types of discounts available.
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Coverage.com, LLC is a licensed insurance producer (NPN: 19966249). Coverage.com services are only available in states where it is licensed. Coverage.com may not offer insurance coverage in all states or scenarios. All insurance products are governed by the terms in the applicable insurance policy, and all related decisions (such as approval for coverage, premiums, commissions and fees) and policy obligations are the sole responsibility of the underwriting insurer. The information on this site does not modify any insurance policy terms in any way.
Quick Facts
$382/year
average savings through Bankrate
2 out of 3 homes
are underinsured
1 out of every 20
insured homes makes a claim each year
100% of homes
need insurance before getting a mortgage
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Insuring new construction homes
As you’re searching for a new home, the cost of home insurance is one of many variables you may want to consider. In general, the newer the house, the cheaper the insurance. Generally, the thinking behind older and newer home rate differences is that the less time a structure has been around, the longer it should take before anything goes wrong with it. The age of your home can also influence which insurance endorsem*nts might be worth adding to your policy.
Determining which new build home insurance endorsem*nts are best for you will depend on your locale, home type, personal belongings and what standard coverage your home insurance already includes. For example, many people have personal property like jewelry, art and electronics with values that exceed what their standard policy will cover. A scheduled personal property endorsem*nt can help fill in the gap and cover your valuable possessions at higher limits. It’s also important to consider whether flood, earthquake or other weather and disaster damage endorsem*nts are a good fit for your location.
Home insurance coverage types for new construction
There are many factors and considerations that go into building a new home on your land. For starters, you may need to buy builder’s risk insurance before the construction gets underway. This insurance for home construction can help protect against damages to the materials and features of the construction project while it is being built. If fire or weather damages the materials or the structure before the building is finished, for example, builder’s risk insurance could help cover the losses.
Builder’s risk insurance
A standard home insurance policy can provide protection and cover up to certain needs, but it may not always be the right protection tool. Homes under construction or serious renovation may benefit from builder’s risk insurance because it is specialized property insurance designed precisely for these situations. With this home insurance construction endorsem*nt, the building is covered while being worked on, including the building materials being used.
The risks a completed home and a home under construction face are not always the same. These differences are one reason that builders’ risk insurance can be helpful. This specialized insurance covers a wide range of perils:
- Theft
- Vandalism
- Fire
- Lightning
- Hail
- Wind
- Explosions
- Contamination
Still, after construction is complete — if not before — you’ll likely benefit from a standard home insurance policy. Builder’s risk insurance is excellent for unfinished home builds, but its job is complete when the house is. Afterward, keeping your property financially protected will involve a traditional homeowner’s insurance policy, which can financially protect both the structure and the contents of your home.
How much does home insurance cost for new construction?
Like most other types of insurance, home insurance rates are calculated by risk. The less likely a home is to need repairs or other alterations and fixes after covered damage, the cheaper it is to insure. Additionally, the less expensive estimated repairs are, the cheaper the policy is. These two variables — the estimated frequency of claims and home repair or replacement cost — play a prominent role in determining insurance premiums. As a result, new building home insurance is often seen as less financially risky by insurance companies. For example, consider the cost of replacing new mass-produced materials instead of antiquated materials that are no longer as commonly available. The older materials will generally cost more.
Currently, the national average cost for homeowners insurance is $1,428 per year. The table below highlights some of the top insurance companies and their average rates for a policy with $250,000 in dwelling coverage, according to Bankrate’s study of average home premiums. Personal rates will vary between customers, companies and circ*mstances. Consider speaking with a licensed agent about quotes to see what your rates could be.
| Home insurance company | Average annual premium for $250K in dwelling coverage |
|---|---|
| Allstate | $1,340 |
| Amica | $2,996 |
| Chubb | $1,775 |
| Travelers | $1,249 |
| USAA | $969 |
New construction home discounts
It’s not uncommon for insurance companies to offer discounts on policies for newly constructed homes. As mentioned, these newer structures are often seen as less risky by the provider, and some insurance providers use discounts to incentivize building materials that can reduce the risk of the homeowner filing a claim. If you’re a first-time homebuyer, you may want to consider these home insurance discounts when deciding whether or not to purchase a new construction.
Discounts vary between companies and some are dependent on the specific materials used in construction. Below are some other common discounts that might make sense for a new home.
- New home construction discount: This is often one of the most significant discounts you can find for home insurance. Actual savings will vary between companies and policies. Generally, new home discounts can save homeowners significantly during the first few years of insuring a new home.
- Home security discount: Many devices ranging from fire extinguishers to smoke and burglar alarms can lead to discounts. Tech and safety features that help reduce risk to your home are often able to reduce your premiums.
- Roofing discounts: The age of your roof and the material it is made of can impact premiums. New roofs, especially when made of more durable materials, can often qualify for discounts with some insurers.
Frequently asked questions
Written by
Joshua Cox-Steib
Contributor, Personal Finance
Read more from Joshua
Joshua Cox-Steib has two years of experience in writing for insurance domains such as Bankrate, Coverage.com, The Simple Dollar, Reviews.com, and more. His work has also been featured on such sites as MSN and BBB (Better Business Bureau). His insurance writing career has spanned across multiple product lines, with a primary focus on auto insurance, life insurance, and home insurance.
