Homeowners insurance for new construction

Insurance for new construction

New construction insurance is typically more affordable than it is for older homes. Rate data from Quadrant Information Services suggests that, on average, a policy for a home built in 2020 with a $300K dwelling limit costs 26 percent less compared to a home built in 1959. An older home may be built with hard-to-source materials, which can make repairs more expensive, or have an older electrical system, which might spark a fire. Newer builds usually don’t have these issues. The risk of claimable damage is a major home insurance rating factor, so you’ll typically find cheaper home insurance for a new build compared to an older property.

When should you buy home insurance when building a new house?

Once you move into your new home, a home insurance policy can financially protect your property from covered events. But while the building is under construction, your contractor most likely has coverage to protect against vandalism, fires and more. It's important to understand how long the contractor's policy remains in effect so that you can have your own policy start the day the new construction insurance ends. It is important to ensure that there is never a time when your new home does not have coverage, even if it is for a single day.

If you do find that you have a gap in coverage, an insurance binder may help you out. These are temporary policies that can provide coverage for a limited period of time. This may be necessary if your mortgage lender insists on proof of insurance to be sure their investment in your home is properly protected. If you find that you will have a period without coverage before your regular home insurance policy kicks in, you may want to ask your carrier about issuing one.

While your home is being built, however, your builder or contractor is likely to have coverage for your property. This will protect against the following perils, among others:

• Theft
• Vandalism
• Fire
• Lightning
• Hail
• Wind
• Explosions
• Contamination

Before you begin building your home, be sure to meet with a licensed contractor to ask them about their insurance policy. You can also work with a licensed insurance agent to identify potential coverage gaps. If the contractor’s commercial insurance does not provide enough coverage, you might need your own builder’s risk insurance policy.

Home insurance coverage types for new construction

Every home has different insurance needs, including new builds. Before you buy a policy, it helps to first get familiar with what a standard home insurance contract covers:

• Dwelling coverage (Coverage A): Covers your home’s physical structure from all perils, except those excluded from your policy.
• Other structures coverage (Coverage B): Covers detached structures on your property, like gazebos or standalone garages, from all perils except those excluded from your policy.
• Personal property coverage (Coverage C): Covers your personal items, like furniture and other items in your home, for losses specifically named in your policy.
• Additional living expenses (Coverage D): Helps with the added costs of room and board, food, laundry and parking if you are displaced from your home after a covered claim.
• Liability insurance (Coverage E): Financial protection if you are found negligent for someone else’s injuries that occur on your property. Liability coverage can also extend outside the home.
• Medical payments coverage (Coverage F): Assistance with a guest’s medical expenses if they are injured at your home, even if you were not found to be negligent.

For most homeowners, it comes down to choosing between an HO-3 or HO-5 home insurance policy. Both policy types offer all of the coverage listed above but differ in how you are reimbursed when you file a claim and which losses your policy covers. An HO-3 is the most common type of home insurance, but an HO-5 offers more comprehensive coverage.

How much does home insurance cost for new construction?

As of May 2025, the average cost of home insurance for a home built in 2020 is $2,128 for a policy with a $300K dwelling limit. However, each home insurance company uses a proprietary method for calculating rates. So, when collecting home insurance quotes, you’ll notice that quoted rates will differ from company to company.

New construction home discounts

It’s not uncommon for insurance companies to offer discounts on policies for newly constructed homes. Discounts vary between companies and some are dependent on the specific materials used in construction. But, if you live in a new home, you may want to ask your insurance agent about potential ways to save, including:

• Bundling discount: If you are happy with your insurance company, consider buying both your car insurance and home insurance from it, called bundling. Most insurers offer a discount if you purchase more than one policy from them.
• Claims-free discount: Proving to be a low-risk client can save you money. If you go for a certain period of time — often three to five years — without filing a claim, your insurer may give you a discount.
• Payment discounts: Paying through an automatic payment system may net you some savings, as might agreeing to receive bills and other documents digitally rather than through postal mail.
• Safety discounts: Any device that makes your home safer, from smoke detectors to smart locks, could earn you a discount from some carriers.
• New roof discount: Replacing your roof, especially if you use storm-resistant materials, could earn you a discount.
• New construction discount: If your home is a new build, you could earn a significant amount off your premium rate.

Frequently asked questions

Methodology

Bankrate utilizes Quadrant Information Services to analyze May 2025 rates for all ZIP codes and carriers in all 50 states and Washington, D.C. Quoted rates are based on married male and female homeowners with a clean claim history, good credit and the following coverage limits:

• Coverage A, Dwelling: $300,000
• Coverage B, Other Structures: $30,000
• Coverage C, Personal Property: $150,000
• Coverage D, Loss of Use: $60,000
• Coverage E, Liability: $500,000
• Coverage F, Medical Payments: $1,000

The homeowners also have a $1,000 deductible, a $500 hail deductible and a 2 percent hurricane deductible (or the next closest deductible amounts that are available) where separate deductibles apply.

These are sample rates and should be used for comparative purposes only. Your quotes will differ.

Year built: Rates were calculated based on the following years built for homes and assigned to our homeowners: “1959, 1982, 1992, 2010, 2017 (base) and 2020.”