Home Insurance for New Construction: What to Know in 2026

Home insurance rates vary depending on your home’s specific risks, and no two homes are alike. That includes brand-new homes, too, and even when your home’s under construction. In fact, a new build has its own unique risks, including contractor delays or theft from the construction site.^[1]

Here’s what you should know about new construction insurance, whether you’re looking at a builder’s risk policy for a new build or you’re the first owner moving into a new home.

How to insure a newly constructed home

If your new home is move-in ready, you’ll generally use the same standard homeowners insurance policy that most homeowners purchase — an HO-3 policy. A builder’s risk policy, in contrast, is for a home that’s under construction.

Yet there are some differences for a new home that your insurance company will take into account, as you’ll see below.

Why new homes are often cheaper to insure

In general, the more things that can go wrong with your home, the more expensive your home insurance policy will be. But a new home often has fewer risks than an old home, for several reasons:

• Newer key features: Things like railings, plumbing, and electrical are all more likely to fail and cause problems as a home ages. A newer home ideally puts off these potential problems for years to come.

• Building code compliance: Local building codes have gotten more complex over time, adding to the building cost. This means older homes may need add-on ordinance coverage to maintain compliance. Newer homes are already built up to snuff.

• Latest building materials: Your new home should be in peak condition, with a well-protected exterior that keeps out the elements. Plus, newer homes often have more cost-effective building materials than older homes.

• Insurance discounts: Check with your insurance agent. Many companies offer an up-front discount on your insurance premium with a newer home.

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Cost of home insurance for new construction

Insurance coverage for a newly constructed home that no one has ever lived in can often be cheaper than a home that’s been standing for a few seasons.

In fact, the average cost of new construction home insurance on a $300,000 move-in ready house is $133 per month, assuming you opt for a $1,000 deductible. 

Here’s how monthly rates changes over time and as you go up in home value:

Age of Home	$300K Dwelling Coverage	$500K Dwelling Coverage	$750K Dwelling Coverage
New construction	$133	$203	$290
2 years	$133	$203	$290
10 years	$180	$275	$394
20 years	$210	$321	$460
30+ years	$215	$328	$470

How to insure a home under construction

Standard home insurance coverage doesn’t apply to a home unless it’s certified for occupancy. For that, you’ll need a separate builder’s risk policy. This policy provides property insurance for your home while it’s being built, as well as the materials you’ve purchased for its construction.^[3]

Some lenders require that your construction project have coverage under a builder’s risk policy as a condition of getting a construction loan. Whether or not your lender requires such coverage, it may be a good idea to purchase a policy unless you can afford the cost of losing your entire home before you move in.

Some general contractors will also purchase a builder’s risk policy for you and build it into your overall project costs.

If your contractor doesn’t purchase such a policy, you’ll need to price out new construction insurance rates on your own and go through the underwriting process with an insurance agent.

Risks of not insuring a home while under construction

Buying insurance coverage for your home construction project offers financial protection and peace of mind. After all, the construction phase is a particularly vulnerable time for your home, with a higher potential risk of property damage, including:

• Vandalism

• Storm damage

• Theft of on-site building materials

• Structure fires from improper electrical work

Average cost to insure a home under construction

The insurance cost can vary during construction, depending on the specific exclusions and covered loss scenarios outlined in your contract. But in general, most builder’s risk policies charge a premium ranging from 1% to 5% of your budgeted construction costs. That’s $1,000 to $5,000 for every $100,000 in new-build costs.

Deductible costs can vary, too, typically between $500 and $5,000 if you need to file an insurance claim. As with other insurance products, the bigger the deductible you choose, the less you’ll pay for coverage, because you’re taking on more of the risk yourself.

Builder’s risk vs. homeowners insurance

Here’s a quick guide to home insurance coverage, based on the different stages of a home’s life cycle.

	Builder’s Risk Insurance	Homeowners Insurance
Purpose	Covers your home during the building or renovation	Covers your home after building, along with the specific risks that come with being a homeowner
Coverage period	The period between when you hire a contractor and when your home is certified for occupancy	After your home is certified
What’s covered	Construction materials and the assembled home structure; optional coverage for construction delays, floods, and earthquakes	Personal property, liability insurance, additional living expenses, and dwelling coverage
Who needs it	Homeowners who are building or remodeling	Homeowners in general

Builder’s risk insurance often terminates when the coverage period ends or when you move into your home. It’s best to coordinate with your insurance company so that your new home insurance coverage begins on the same day your builder’s risk policy ends, helping you avoid any coverage gaps.

What builder’s risk insurance covers

Builder’s risk coverage is for specific insurance needs during your home’s construction. This is different from the coverage you’d need if you’ve lived in your home for a long time. Here’s what it covers:

• Building structures: You’ll have coverage against damage from storms, thieves, wildfires, and more to the actual structure of your home, as it comes together.

• Loss of on-site materials: If you lose building materials due to fire, theft, vandalism, or weather events (minus floods, which require a separate endorsement), you’ll have coverage.

• Loss of off-site materials: If you’ve already paid for building materials, such as drywall panels or windows, but they’re still at the supplier’s warehouse, you’ll have coverage for that.

Depending on the insurance company you choose, you might also have some additional coverage options to choose from, including:

• Flood damage: As with regular home insurance, a builder’s risk policy doesn’t cover losses due to floods — something to keep in mind before your lumber piles wash away.

• Earthquake damage: Similarly, a builder’s risk policy doesn’t cover earthquake damage, which is an important consideration since your home may not yet be seismically sound.

• Construction delays: Delays are common in construction and can cost you money if you need to move in by a certain date but your home isn’t yet ready.

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How to save on home insurance for new construction

New construction home insurance isn’t cheap, but you have ways to save:

Shop around

Don’t just go with your current insurer or the first company you get a quote from. Make sure to get home insurance quotes from at least three to five companies.



Choose a higher deductible

You’ll often get a choice of deductible with a builder’s risk policy. Choosing a higher deductible — that you can still afford to pay out of pocket — generally means a cheaper premium.



Seek out insurance discounts

Many insurers offer multi-policy discounts if you have other coverage, such as auto insurance, with the same company. Check if they offer discounts for other things, like installing security systems.



Get coverage through your contractor

Your general contractor may be able to purchase coverage at a cheaper rate than you can get and pass the cost along to you.

Home insurance for new construction FAQs