While most people buy ready houses, others are more content with constructing their house from scratch. The insurance needed for a house under construction is much different from that needed for an existing house. Here are some useful insurance tips to keep in mind if you are constructing a house:
Confirm Insurability before Commencing Construction
Don't start building and then look for insurance; instead, you should look for insurance before the construction starts. This is the only way to ensure that your house is insurable. If you start construction before getting insurance, you may found out later that your home is uninsurable for one reason or another. For example, you may have difficulty insuring your house if it's located in a flood-prone area or you may use dangerous materials that insurance companies won't like to work with.
Understand the Coverage Offered by the Constructor's Insurance
Most constructors carry builders risk policies, and this is one of the first things most property owners confirm when hiring contractors. However, just like other forms of home insurance, builders risk insurance come in different categories. For example, some just cover the existing structure (the half-built house) while others cover both the structures and the onsite materials. If you don't confirm what kind of coverage your contractor carries, you may be surprised if your building supplies are stolen and you have no source of compensation.
Incorporate Low-Insurance Techniques in Your Construction
You should also know that both the materials used in the construction and the building technology/design will affect your home insurance rates. You won't have control over both of these factors when buying a house; however, you can decide to incorporate insurance-friendly technology and materials if you are building a new house. Here are a few ways for doing this:
- Use fire-proof materials
- Use durable construction materials
- Ensure the house is well-raised above the local flood level
- Use storm-resistant designs if storms frequent your locale
Update Your Coverage as Necessary
The value of your construction site when the contractor is just breaking the ground is much different from the value of the same site when the construction is halfway or when it's nearly done. Therefore, you can't have the same coverage for all those different construction periods. Note that you will also need to buy or upgrade to new coverage after the construction is complete.
Therefore, before commencing construction, you, your contractor and your insurance agent should sit down and iron out the insurance issues. Insurance companies like Stanger Insurance can help.