Does my home insurance cover me during construction?

Many homeowners are unaware that their home insurance policies may not cover them at all while the home is under construction. Home insurance policies are written by insurance companies who assume the home will be occupied daily. Deep inside the fine print of almost all home insurance policies are limitations and exclusions for homes under construction.

For example, a major US home insurer has the following working in their home insurance policy:

“We do not insure for theft: a. from a dwelling that is under construction, until after the construction has been completed and when the dwelling is occupied by an insured”

The above is only one example of a home policy limitation during construction. There are many more depending on the home insurer.

Another issue that comes up while a home is under construction is vacancy. Many homeowners will not live in the home while a home is under construction. When this happens, the fine print of insurance policies include vacancy limitations or exclusions.

For Example:
We do not insure loss or damage directly or indirectly caused by, arising out of or resulting from:
a. vandalism or malicious mischief if:
(1) the dwelling has been vacant beyond a period of 30 days

Let’s say the home is vacant and a trespasser enters the home and vandalizes the home and a fire burns the house down as a result of the vandalism. The insurer could then have the grounds to deny the claim due to the vacant home.
How Do I Insure My Home While It Is Under Construction?

Before your construction project begins, you will want to contact your insurer and notify them that the home will be under construction. Give them the details of the project- length of project, scope of work, project costs, and contractors information. Ask the insurer if you are covered for the project and if so what limitations that might apply to you. Most likely you will need to take the extra step of insuring the home under a course of construction policy. A course of construction (sometimes called builders risk insurance) is a special type of policy that insureds the home during construction. Work closely with your insurance agency or company to ensure that the course of construction insurance policy meets your coverage needs. Many course of construction insurance policies need to be pieced together.

You will also likely want to have your building provide you with proof of their general liability, workers compensation, and commercial auto insurance policies to ensure that they are properly insured. Work with your insurance agency and attorney to make sure all of the documentation is correct.

While their are many details to consider when insuring your home while is it under construction, the main point of this article is to encourage you to work closely with your insurance agent and company to make sure you have the proper insurance policy through the construction process.

We write course of construction policies for homes in Santa Barbara, and throughout California and several other states. If you would like a free course of construction policy review please contact us at 805-963-4048.

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