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You’ve spent a while waiting to move into your brand-new home. But before you can get the keys and start moving in your furniture, your mortgage lender will require you to purchase homeowners insurance.

Insuring a new home or a home under construction comes with some unique considerations. For a home under construction, you might want builder’s risk insurance. And for a newly built or renovated home, you’ll want to make sure you’re purchasing enough homeowners insurance to cover your home’s value.

Let’s walk through these different home insurance coverages, how they work, and how you can find cheap home insurance.

Quick Facts

The average home insurance rate for newly constructed homes is cheaper than the rate for older homes.
Your contractor may require builder’s risk insurance during the construction process.
Chubb and State Farm are leaders in builder’s risk insurance.

How to insure a newly constructed home

Your home’s age is a major factor in your home insurance costs. Newly constructed homes — meaning homes built within the last two years — may be cheaper to insure given their lack of wear and tear and minimal mechanical issues.^[1]

For example, the average home insurance rate for a 2-year-old home with $300,000 in dwelling coverage and a $1,000 deductible is $1,468 per year — compared to $2,276 per year for a 20-year-old home with the same coverage limits and deductible.

But new homes also might have higher values, which may call for more robust home insurance coverage.

What new home insurance covers

Whether your home is one year or 40 years old, you need a standard home insurance policy, which covers damage to your home and personal property. Insurance companies don’t make different policies for newer homes — but your home’s age may affect how much coverage costs.

Here’s what a standard home insurance policy covers:^[2]

Your home’s structure
Detached structures, such as a garage or shed
Your personal belongings, such as furniture and clothing
Bodily injury to guests on your property
Additional living expenses, like a hotel room while your home undergoes repairs

And here’s what standard policies typically exclude:

Damage caused by earthquakes
Damage caused by flooding
Damage from routine wear and tear

Important Information

If you live in a high-risk flood zone, it might be a good idea to get a flood insurance policy through the Federal Emergency Management Agency’s National Flood Insurance Program. Homeowners who live in a place prone to other natural disasters or severe storms should look into policies with additional protection — though this may come with higher home insurance rates.

How to insure a home under construction

A home under construction carries specific risks that you won’t find in a completed home. For example, what if the wood being used for your future home is damaged while being driven to the construction site? A standard homeowners insurance policy, which covers the existing structure of a home, wouldn’t cover this type of damage.

That’s where builder’s risk insurance comes in. You or your contractor might get this form of insurance, which covers the risks that come with building a house. Builder’s risk insurance covers building materials that are either in transit or being stored at the construction site. This coverage protects you if these materials are stolen or damaged.

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What builder’s risk insurance covers

Builder’s risk insurance is a short-term policy that protects your home while it’s being built. Here are a few things builder’s risk insurance covers:

Damage or theft of building materials that are on site or in transit
Wind damage to temporary walls
Fires from temporary electrical wiring set up at the construction site
Basement damage before the foundation is fully secured

Once the construction team has built the home and it’s being used as intended, builder’s risk insurance no longer applies. Now, standard homeowners insurance covers your home.

Builder’s risk insurance might also not cover certain leased equipment and temporary storage equipment.

Cost of home insurance for new construction

The average annual cost of home insurance for a $300,000 home with a $1,000 deductible is $2,377 per year, according to Insurify data.

Several factors affect your insurance costs, such as your home’s age, value, location, loss history, construction quality, and more. Additionally, your credit history and the amount of coverage you purchase will affect the cost of your homeowners policy.

Cost of insuring a newly constructed home

Insuring a newly constructed home is cheaper on average than insuring an older home. For example, a standard State Farm policy is $1,392 per year for a new home and $1,995 for an old home built in 1940.

New homes feature modern building materials and construction methods, which make them less likely to sustain damage. Meanwhile, old homes have wear and tear that’s more likely to lead to damage and home insurance claims, which is why insurers charge more to cover these homes.

The table below shows how homeowners insurance rates vary based on a home’s age. Generally, rates are higher the older a home is.

Age of Home ▲▼	$150K Dwelling Coverage ▲▼	$350K Dwelling Coverage ▲▼	$700K Dwelling Coverage ▲▼
2 years	$4,829	$1,644	$2,982
10 years	$1,268	$2,234	$4,052
20 years	$1,447	$2,549	$4,623
30+ years	$1,511	$2,662	$4,829

Cost to insure a home under construction

The price of builder’s risk insurance is typically a percentage of the total cost of a construction project — usually either 1%, 3%, or 5%. Your location, which influences local supplies and labor costs, is an important factor in the cost of your builder’s insurance. The quality of the construction materials and projected size of the completed home are other factors.

The table below shows how much homeowners might pay for builder’s risk insurance based on the cost to build their home and the percentage used to price coverage. More expensive construction projects generally lead to higher builder’s risk insurance costs. As expected, policies that cost 1% of the construction cost tend to be cheaper than other options.

Total Construction Cost ▲▼	1% of Construction Costs ▲▼	3% of Construction Costs ▲▼	5% of Construction Costs ▲▼
$350,000	$3,500	$10,500	$17,500
$500,000	$5,000	$15,000	$25,000
$750,000	$7,500	$22,500	$37,500

Best insurance companies for newly constructed homes

The following insurance companies are good options for homeowners looking to insure their newly constructed homes.

Erie: Best for low rates

low ratesErie Insurance

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IQ Score The Insurify Quality (IQ) Score uses more than 15 criteria to objectively rate insurance companies on a one-to-ten scale. The Insurify editorial team researches insurer data to determine the final scores.	9.0/10
JD Power J.D. Power data measures overall customer satisfaction and claims satisfaction based on a 1,000-point scale.	870
$300,000 Dwelling A standard HO-3 home insurance policy typically includes dwelling, personal property, and liability coverage. The average rate displayed here reflects a policy with the following coverage limits: $300,000 dwelling; $25,000 personal property; $300,000 personal liability; $30,000 loss of use; and a $1,000 deductible for medical payments to others.	$112/mo
$500,000 Dwelling A standard HO-3 home insurance policy typically includes dwelling, personal property, and liability coverage. The average rate displayed here reflects a policy with the following coverage limits: $500,000 dwelling; $25,000 personal property; $300,000 personal liability; $30,000 loss of use; and a $1,000 deductible for medical payments to others.	$167/mo

Overview

Erie is one of the cheapest insurance options for homeowners. Its base policy includes 100% guaranteed replacement cost coverage, which not all insurers offer as a standard coverage option. And homeowners can save with discounts for policy bundling, installing safety features in their home, and getting an advanced quote.

Pros and cons

Pros

Low rates
Highest J.D. Power rating for customer satisfaction
Several optional coverages available

Cons

Available in only 12 U.S. states
Limited discount options
Mobile app has mixed reviews

Amica: Best for discounts

discountsAmica

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IQ Score The Insurify Quality (IQ) Score uses more than 15 criteria to objectively rate insurance companies on a one-to-ten scale. The Insurify editorial team researches insurer data to determine the final scores.	8.3/10
JD Power J.D. Power data measures overall customer satisfaction and claims satisfaction based on a 1,000-point scale.	862
$300,000 Dwelling A standard HO-3 home insurance policy typically includes dwelling, personal property, and liability coverage. The average rate displayed here reflects a policy with the following coverage limits: $300,000 dwelling; $25,000 personal property; $300,000 personal liability; $30,000 loss of use; and a $1,000 deductible for medical payments to others.	$152/mo
$500,000 Dwelling A standard HO-3 home insurance policy typically includes dwelling, personal property, and liability coverage. The average rate displayed here reflects a policy with the following coverage limits: $500,000 dwelling; $25,000 personal property; $300,000 personal liability; $30,000 loss of use; and a $1,000 deductible for medical payments to others.	$234/mo

Overview

Amica already has fairly low rates. Taking advantage of discounts for bundling, loyalty, and going claims-free can lower rates even more. You can also earn a credit when you insure a new or remodeled home.

Pros and cons

Pros

Several optional coverages available, including water backup, special computer coverage, and increased liability coverage
Low rates
High J.D. Power customer and claims satisfaction ratings

Cons

Policies not available online
Above-average number of complaints with the National Association of Insurance Commissioners (NAIC)
Not available in Hawaii or Alaska

American Family: Best for personalized coverage

personalized coverageAmerican Family

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IQ Score The Insurify Quality (IQ) Score uses more than 15 criteria to objectively rate insurance companies on a one-to-ten scale. The Insurify editorial team researches insurer data to determine the final scores.	9.1/10
JD Power J.D. Power data measures overall customer satisfaction and claims satisfaction based on a 1,000-point scale.	840
$300,000 Dwelling A standard HO-3 home insurance policy typically includes dwelling, personal property, and liability coverage. The average rate displayed here reflects a policy with the following coverage limits: $300,000 dwelling; $25,000 personal property; $300,000 personal liability; $30,000 loss of use; and a $1,000 deductible for medical payments to others.	$113/mo
$500,000 Dwelling A standard HO-3 home insurance policy typically includes dwelling, personal property, and liability coverage. The average rate displayed here reflects a policy with the following coverage limits: $500,000 dwelling; $25,000 personal property; $300,000 personal liability; $30,000 loss of use; and a $1,000 deductible for medical payments to others.	$156/mo

Overview

When you insure your new house, American Family offers several ways to personalize your coverage. Its additional insurance products — such as equipment breakdown coverage, hidden water damage coverage, and a diminishing deductible — make it the best option if you’re looking for a feature-rich home insurance company.

Pros and cons

Pros

Additional coverage available
Below-average number of complaints with the NAIC
Generous bundling discounts

Cons

Available in only 19 states
Below-average J.D. Power customer satisfaction score
Not the lowest rates

How we chose the best companies for newly constructed homes
To choose the best companies for newly constructed homes, Insurify considered the average annual rates of 40 top insurers. We also considered each insurer’s availability, discounts and coverage options, industry ratings, and user reviews for customer service and claims processing.
Insurify’s team of data scientists analyzes millions of home insurance quotes and weighs publicly available reviews, claims payout rates, complaint indexes, financial strength scores, company reputations, and proprietary quoting data. Our editorial team applies this insight to inform our unbiased reviews and recommendations.

Best insurance companies for homes under construction

Builder’s risk insurance can be useful as your home is being built. These three insurance companies can protect your home while it’s under construction.

Chubb: Best for specialized agents

specialized agentsChubb

Compare personalized, real-time quotes

IQ Score The Insurify Quality (IQ) Score uses more than 15 criteria to objectively rate insurance companies on a one-to-ten scale. The Insurify editorial team researches insurer data to determine the final scores.	6.5/10
A.M. Best A.M. Best analyzes an insurer’s financials, operating performance, business profile, and other factors to generate an opinion-based rating of a company’s financial and credit strength. Ratings range from A++ (exceptional) to D (poor).	A++
$300,000 Dwelling A standard HO-3 home insurance policy typically includes dwelling, personal property, and liability coverage. The average rate displayed here reflects a policy with the following coverage limits: $300,000 dwelling; $25,000 personal property; $300,000 personal liability; $30,000 loss of use; and a $1,000 deductible for medical payments to others.	$150/mo
$500,000 Dwelling A standard HO-3 home insurance policy typically includes dwelling, personal property, and liability coverage. The average rate displayed here reflects a policy with the following coverage limits: $500,000 dwelling; $25,000 personal property; $300,000 personal liability; $30,000 loss of use; and a $1,000 deductible for medical payments to others.	$234/mo

Overview

Chubb’s underwriters have specialized experience in builder’s risk insurance, making the company a good option for people who want to work more closely with an agent. Chubb offers flexible coverage for homes that are under construction. This includes customizable coverage for areas prone to floods or windstorms, as well as coverage for building delays.

Pros and cons

Pros

Highly experienced team of specialists
Flexible coverages
Interactive online underwriting platform

Cons

Might not be the cheapest option
Below-average J.D. Power customer satisfaction rating
Not all products are available in all states

State Farm: Best for trusted customer service

trusted customer serviceState Farm

Compare personalized, real-time quotes

IQ Score The Insurify Quality (IQ) Score uses more than 15 criteria to objectively rate insurance companies on a one-to-ten scale. The Insurify editorial team researches insurer data to determine the final scores.	9.3/10
JD Power J.D. Power data measures overall customer satisfaction and claims satisfaction based on a 1,000-point scale.	842
$300,000 Dwelling A standard HO-3 home insurance policy typically includes dwelling, personal property, and liability coverage. The average rate displayed here reflects a policy with the following coverage limits: $300,000 dwelling; $25,000 personal property; $300,000 personal liability; $30,000 loss of use; and a $1,000 deductible for medical payments to others.	$141/mo
$500,000 Dwelling A standard HO-3 home insurance policy typically includes dwelling, personal property, and liability coverage. The average rate displayed here reflects a policy with the following coverage limits: $500,000 dwelling; $25,000 personal property; $300,000 personal liability; $30,000 loss of use; and a $1,000 deductible for medical payments to others.	$205/mo

Overview

State Farm is the largest insurance company in the country by market share. Its high customer satisfaction scores from J.D. Power sum up the company’s trust and experience. A State Farm builder’s risk policy covers temporary storage, scaffolding, stolen materials and supplies, and more.

Pros and cons

Pros

Long-standing history in the insurance industry
High J.D. Power customer and claims satisfaction ratings
Large team of experienced agents

Cons

Cheaper options may be available
Not as many discounts as some insurers
Negative customer reviews on Trustpilot

Nationwide: Best for policy customization

policy customizationNationwide

Compare personalized, real-time quotes

IQ Score The Insurify Quality (IQ) Score uses more than 15 criteria to objectively rate insurance companies on a one-to-ten scale. The Insurify editorial team researches insurer data to determine the final scores.	8.7/10
JD Power J.D. Power data measures overall customer satisfaction and claims satisfaction based on a 1,000-point scale.	815
$300,000 Dwelling A standard HO-3 home insurance policy typically includes dwelling, personal property, and liability coverage. The average rate displayed here reflects a policy with the following coverage limits: $300,000 dwelling; $25,000 personal property; $300,000 personal liability; $30,000 loss of use; and a $1,000 deductible for medical payments to others.	$159/mo
$500,000 Dwelling A standard HO-3 home insurance policy typically includes dwelling, personal property, and liability coverage. The average rate displayed here reflects a policy with the following coverage limits: $500,000 dwelling; $25,000 personal property; $300,000 personal liability; $30,000 loss of use; and a $1,000 deductible for medical payments to others.	$250/mo

Overview

Homeowners who opt for a builder’s risk policy with Nationwide have many ways to customize their coverage. Standard coverage protects you from the most common risks that can happen during a construction project. You can also choose from several endorsements, such as debris removal, earthquake and flood coverage, fire department service charges, and pollutant cleanup, among many others.

Pros and cons

Pros

Many ways to customize a builder’s risk policy
Above-average J.D. Power customer satisfaction rating
A+ (Superior) financial strength rating from AM Best

Cons

Not the cheapest rates available
Negative customer reviews on Trustpilot
Not every product may be available in every state

How we chose the best companies for homes under construction
To choose the best companies for homes under construction, Insurify considered the average annual rates of 40 top insurers. We also considered each insurer’s availability, discounts and coverage options, industry ratings, and user reviews for customer service and claims processing.
Insurify’s team of data scientists analyzes millions of home insurance quotes and weighs publicly available reviews, claims payout rates, complaint indexes, financial strength scores, company reputations, and proprietary quoting data. Our editorial team applies this insight to inform our unbiased reviews and recommendations.

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Based on 3,806+ reviews

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How to save on home insurance for new construction

You can save on homeowners insurance coverage with the following tips:^[3]

Raise your deductible
Choosing a higher deductible typically leads to lower monthly premiums — though you’ll pay more out of pocket in the event of a covered loss.
Make necessary repairs
Making repairs or home improvements, such as replacing old equipment or upgrading a faulty water system, makes your home less risky to home insurers — and cheaper to cover.
Bundle home and auto insurance
Purchasing home insurance from the same company you purchase auto insurance from will usually lead to a discount.
Invest in home security
Many insurance companies offer discounts when you install home-security devices around your home.
Improve your credit
Having good or excellent credit will often lead to more affordable rates on home insurance.
Shop around and compare
Insurance experts recommend receiving homeowners insurance quotes from at least five insurers in order to find the best rate and save money.

Home insurance for new construction FAQs

Homeowners often ask the following questions about home insurance for new construction. Here’s what you should know before you buy a policy.

Who insures a home under construction?
Either you or your contractor handles insurance during construction. You might prefer to have your contractor handle builder’s risk insurance given their intimate knowledge of the construction process.
Is homeowners insurance cheaper for newly constructed homes?
Homeowners insurance is usually cheaper for newly constructed homes given their newer materials. Meanwhile, older homes with wear and tear are at greater risk for damage.
What does builder’s risk insurance cover?
Builder’s risk insurance covers damage or theft to building materials that are on the construction site or in transit. It also may cover temporary storage or scaffolding during construction.
What kind of home warranty can you get for new construction?
Builders often back homes with warranties, which can last up to 10 years for “major structural defects” and up to two years for HVAC, plumbing, and electrical systems.

Sources

Insurance Information Institute. "Home buyer's insurance guide."
Insurance Information Institute. "What is covered by standard homeowners insurance?."
Insurance Information Institute. "How to save money on your homeowners insurance."

A.M. SteinbachInsurance Writer

A.M. is a Brooklyn-based writer, editor, and content marketing strategist who's worked with major brands in insurance, tech, finance, and healthcare. He also contributes to The Average Joe, a personal finance newsletter that reaches over 250,000 daily readers. Since 2019, he's written for Insurify, breaking down a diverse range of insurance topics into crisp, readable prose.

A.M. has been a contributor at Insurify since December 2022.

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Edited byAshley CoxSenior Managing Editor

Ashley CoxSenior Managing Editor

7+ years in content creation and management
5+ years in insurance and personal finance content

Ashley is a seasoned personal finance editor who’s produced a variety of digital content, including insurance, credit cards, mortgages, and consumer lending products.

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Table of contents

Table of contentsCompare quotes

How to insure a newly constructed home

What new home insurance covers

How to insure a home under construction

Find Insurance for a New Construction Home

What builder’s risk insurance covers

Cost of home insurance for new construction

Cost of insuring a newly constructed home

Cost to insure a home under construction

Best insurance companies for newly constructed homes

Erie: Best for low rates

low ratesErie Insurance

Amica: Best for discounts

discountsAmica

American Family: Best for personalized coverage

personalized coverageAmerican Family

Best insurance companies for homes under construction

Chubb: Best for specialized agents

specialized agentsChubb

State Farm: Best for trusted customer service

trusted customer serviceState Farm

Nationwide: Best for policy customization

policy customizationNationwide

Shop for Home Insurance

How to save on home insurance for new construction

Raise your deductible

Make necessary repairs

Bundle home and auto insurance

Invest in home security

Improve your credit

Shop around and compare

Home insurance for new construction FAQs

Sources

Compare Home Insurance Quotes Instantly

Table of contents