The process of constructing a home or making any renovations in a home may require insurance coverage before homeowners can legally start building. Most states require this as part of the paperwork for a building or construction permit, which makes sense given the risks that are present in any construction site.
What is home building insurance?
Home building insurance is insurance that covers every aspect of construction, from the foundation to the roof. In most cases, basic coverage is provided by the builder or contractor. However, it is also a good idea for the homeowners to obtain insurance to protect the construction site from occurrences such as natural disasters or accidents involving the homeowners themselves, their friends and family members.
Why do you need home building insurance?
Insurance is important for protecting your construction site and your future home. Typical construction sites are often gate-less, fenceless, and unsecured. The basic structure of the home may sit without secure doors and windows within the first few weeks or months of construction. This makes the site a prime target for break-ins and theft.
Coverage
Homeowners may be required to carry basic dwelling and fire coverage for a home under construction. Basic dwelling coverage can cover protection against perils but not fire coverage. In cases like these, the homeowner can purchase fire coverage separately.
A typical home building insurance policy covers the following:
Coverage for theft of materials, equipment, builder tools
Vandalism
Accidents
Fire
Natural Disasters
Basic coverage carried by most contractors covers theft of materials, equipment and tools, and injuries suffered by the contractor or his crew during construction. This coverage does not extend to injuries sustained by the homeowner or any other family member. For the latter, the homeowner is responsible for any injury that he or a friend sustains. If the homeowner already owns the land on which the construction is being done, he is responsible for any accidents that occur on site. Liability insurance can cover medical expenses, claims for pain and suffering and related damages.
Coverage can last for up to 12 months. This can be renewed if the construction is extended or subjected to delays.
Do you need home building insurance?
Homeowners may need to get building insurance if they are constructing a home or renovating a part of the home and the contractor does not have coverage. Even if the contractor has basic coverage, it is best to obtain insurance for other aspects of construction risks, such as third party liability and natural disasters to ensure that your construction is protected from any kind of liability.
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