new construction insurance

Do I Need Insurance for My New Construction?

September 23, 2021

It’s worth mentioning that new constructions have several unique features when it comes to their insurance. If you neglect those features, you risk exposing yourself to numerous potential losses from theft, fire, and property damage. If you’re considering building a new property, this article can help you determine how much new construction insurance coverage you need.

How Much Coverage Do You Need for a New Build?

Keep in mind that when you insure a new construction, your expected cost of construction must be equal to the total dwelling coverage amount. It’s one way to ensure that if you take a financial loss, you’ll receive an amount that’s close to how much you invested in the property. It’s worth mentioning that your settlement amount is based on the capital you invested at the time of the damage or loss.

Do You Need Liability Insurance for a New Property?

To answer the question precisely, yes, you do need liability insurance for a new construction. That’s because new properties risk facing direct property damage. In fact, liability coverage is essential when it comes to investing in new construction properties.

There is no right or wrong coverage amount, but properties under construction have higher liability exposure. In most cases, higher limits of $1MM per occurrence are required.

As mentioned above, even one fall may cost property owners thousands of dollars. An umbrella policy may be beneficial depending on the size of your portfolio and your comfortability with risk.

It’s important to note that you shouldn’t use your liability coverage from your homeowners insurance for the new build. Doing so can pose some risks. It’s advised to keep your business and personal liability separate from each other.

What Deductible Should You Carry for a New Construction Project?

Keep in mind that deductibles are the amount you agree to pay out of pocket before the insurance company pays the claim. To get an idea of what deductible you should carry consider doubling the lowest claim you would ever file. It’s important to choose the right deductible and pick something you would actually be willing to pay. Picking one that’s too low or too high can end up being a financial burden.

Cost of New Construction Insurance

New construction insurance costs vary depending on multiple factors. Some of them include;

  • Your desired insured amount
  • Your deductible
  • Coverage amount

However, it doesn’t mean that the cheapest insurance coverage is the best coverage, particularly for new constructions. You must speak with an insurance agent to figure out what coverage would be best for your situation. There’s no one size fits all when it comes to insurance.