Extra Protection for Extra Risks

The first thing that comes into mind when owing a home is the need of insurance, but when it comes to homes under construction, the kind of coverage required can get a little fuzzy. While remodeling a house or buying a new house still under construction can be exciting, it’s also important to make sure all aspects of the home and project are covered.

It is very important to consider home insurance for your new home during construction. If you don’t, you may be exposing yourself to a great deal of risk if a fire, theft, or other event damages or destroys your partially-completed home. In fact, there are many ways to protect your new home during construction.

If the homeowner opts to reside within the home during construction

When it comes to home insurance, one important distinction to make is where the homeowner will be living while a construction project takes place. If the homeowner is residing within the home during remodels, renovations, or other construction projects, a standard homeowners insurance policy will provide coverage for property damage and liability-related issues. Liability coverage reimburses homeowners for legal fees in the event a third party sues them.

Personal property coverage protects against damage to your home’s dwelling or structure while it’s under construction and also protects your belongings such as furniture, electronics, clothing, artwork, and decorations from potential damage during the project. Liability coverage protects against bodily injury or property damage claims made by third parties, such as the contractors and other workers, while on your property.

If the homeowner plan to move out during construction

            Some renovations are so complex that the homeowner must temporarily move out. While this may mean more drastic and rewarding changes for the home, it also complicates matters when it comes to insurance, since homeowners insurance is not designed to cover complex renovations. If you plan to live elsewhere while your home is under construction, your homeowners insurance policy won’t provide enough coverage. Instead, you’ll need a different policy known as builder’s risk insurance.

Builder’s risk policies provide more extensive coverage than standard homeowners insurance. During complicated renovations and remodels, builder’s risk insurance is crucial to keep your property protected. This type of policy covers property with constantly changing values, such as homes under construction. If something happens to your home during the project, you’ll be reimbursed for the current value of the property with any added value from the new construction factored in.

Additionally, you’ll likely want to purchase an umbrella insurance policy. Umbrella insurance extends your liability coverage to a much higher limit—up to one million dollars. For huge home construction projects, many workers will be on your property. As the homeowner, you are responsible for their safety when it comes to dangers posed by your home or belongings. It’s important to have substantial liability coverage in case a worker gets hurt on the job and decides to sue you.

Note that, contractors must carry their own insurance, too

Licensed contractors must also carry insurance coverage. Before hiring someone to do risky construction work on your beloved home, you have the right to ask them what type of insurance they have. As the property owner, you are responsible for coverage to the dwelling and your personal belongings, as well as liability coverage for any injuries workers sustain due to perils on your property. Contractors need their own liability protection, as well.

Contractors need to have liability insurance in case they accidentally damage or destroy your property, and you decide to sue them. They also need it to protect themselves if they injure the homeowner or another property owner while working and get sued.

Additionally, contractors often carry policies called inland marine insurance to protect their equipment that gets transferred between job sites. They also usually carry builder’s risk insurance to protect their materials. Finally, contractors must be covered by workers’ compensation coverage in case they get injured due to routine job-related activities during a construction project.

Insurance matters might be a little bit complicated, however, with a deeper understanding of how different types of insurance coverage apply, you’ll surely find yourself protected. Don’t hesitate to ask for any clarifications and questions. It is worth talking with ONYX Insurance brokers for your needs. We can always assist you. Just contact or email us!