More than 1.6 million new housing projects were initiated between July 2021 and July 2022. If you’re part of this new home boom and just built a property, you may be preparing to insure it. Bankrate’s experts can help walk you through homeowners insurance for new construction, the coverage types you may want, the average cost of a policy and the types of discounts available.

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Luckily, homeowners insurance for new construction can be cheaper than average, depending on how the home was built. Newer homes typically have fewer problems and certain building features can score you discounts. For instance, if you used fire-resistant building materials or installed a burglar alarm, you may be able to get a discount on your premium.

Insuring new construction homes

When looking for a home to buy, the cost of home insurance is one variable you may want to consider. In general, the newer the house, the cheaper the insurance. The less time a structure has been around, the longer it should take before anything goes wrong with it. At least, that’s part of the thinking behind new and older home insurance rate differences. The age of your home can also influence which insurance endorsements might be worth adding to your policy.

Determining which new build home insurance endorsements are best for you will depend on your locale, home type, belongings and what standard coverage your home insurance already includes. For example, many people have personal property like jewelry, art and electronics with values that exceed what their standard policy will cover. A scheduled personal property endorsement can help fill in the gap and cover your valuable possessions at higher limits. It’s also important to consider whether flood, earthquake or other weather and disaster damage endorsements are a good fit for your location.

Home insurance coverage types for new construction

There are many factors and considerations that go into building a new home on your land. For starters, you may need to buy builder’s risk insurance before the construction gets underway. This coverage can protect against damages to the materials and features of the construction project while it is being built. If fire or weather damages the materials or the structure before the building is finished, for example, builder’s risk insurance could help cover the losses.

Builder’s risk insurance

A standard home insurance policy can go a long way, but it may not always be the right protection tool. Homes under construction or serious renovation may benefit from builder’s risk insurance because it is specialized property insurance designed precisely for these situations. With this home insurance construction endorsement, the building is covered while being worked on, including the building materials being used.

The risks a completed home and a home under construction face are not always the same. These differences are one reason that builders’ risk insurance can be helpful. This specialized insurance covers a wide range of perils:

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

Still, after construction is complete — if not before — you’ll likely benefit from a standard home insurance policy. Builder’s risk insurance is excellent for unfinished home builds, but its job is complete when the house is. Afterward, keeping your property financially protected will involve a traditional homeowner’s insurance policy, which can protect both the structure and the contents of your home.

How much does home insurance cost for new construction?

Home insurance, like all insurance, is priced based on financial risk. The less likely a home is to need repairs or other alterations and fixes after covered damage, the cheaper it is to insure. Additionally, the less expensive estimated repairs are, the cheaper the policy is. These two variables — the estimated frequency of claims and home repair or replacement cost —  play a prominent role in determining insurance premiums. As a result, new building home insurance is often seen as less financially risky by insurance companies. For example, consider the cost of replacing new mass-produced materials instead of antiquated materials that are no longer as commonly available. The older materials will generally cost more.

The table below highlights some of the top insurance companies and their average rates for a policy with $250,000 in dwelling coverage, according to Bankrate’s study of average home premiums. Personal rates will vary between customers, companies and circumstances. Consider speaking with a licensed agent about quotes to see what your rates could be.

Home insurance company Average annual premium for $250K in dwelling coverage
Allstate $1,300
Erie $959
Nationwide $1,075
State Farm $1,360
USAA $978

New construction home discounts

It’s not uncommon for insurance companies to offer discounts on policies for newly constructed homes. As mentioned, these newer structures are often seen as less risky by the provider, and some insurance providers use discounts to incentivize building materials that can reduce the risk of the homeowner filing a claim. If you’re a first-time homebuyer, you may want to consider these home insurance discounts when deciding whether or not to purchase a new construction.

Discounts vary between companies and some are dependent on the specific materials used in construction. Below are some other common discounts that might make sense for a new home.

  • New home construction discount: This is often one of the most significant discounts you can find for home insurance. Actual savings will vary between companies and policies. Generally, new home discounts can save homeowners significantly during the first few years of insuring a new home.
  • Home security discount: Many devices ranging from fire extinguishers to smoke and burglar alarms can lead to discounts. Features that help reduce risk to your home are often able to reduce your premiums.
  • Roofing discounts: The age of your roof and the material it is made of can impact premiums. New roofs, especially when made of more durable materials, can often qualify for discounts with some insurers.

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