What kind of insurance do I need for building a house?
Asked by: Mrs. Sally Muller | Last update: December 10, 2025Score: 4.1/5 (5 votes)
What type of insurance do I need to build a house?
Builders Risk (Course of Construction) Insurance
Other policies like homeowners insurance or commercial property insurance will typically not cover structures during construction. Builders risk policies will usually have options to cover the following types of property: Buildings and structures.
Do I need homeowners insurance while building a house?
A standard home insurance policy won't cover a home that's under construction. You'll need a builder's risk insurance policy, which offers less coverage, but will protect the physical structure of the dwelling, building materials and on- and off-site equipment.
What is the average cost of construction insurance?
Professional liability insurance costs for construction businesses. Construction businesses pay an average premium of $65 per month, or $785 annually, for professional liability insurance. This policy is also referred to as errors and omissions insurance (E&O).
When should builders risk insurance start?
A builder's risk insurance policy usually starts on the date when all the contracts get signed, but certain policy provisions may restrict when coverage begins for your project.
What Kind of Insurance Do I Need For My Construction Business?
Who typically pays for builders risk insurance?
Who purchases builder's risk insurance? Homeowners and contractors can both purchase builder's risk coverage. In some cases, though, the insurance carrier is the party who's taking on primary risk of a project. In those agreements, it's common to name the others as insured parties on the same policy.
How much is builders risk insurance a month?
Typically ranges from $100 to $300 per month. Smaller residential projects typically fall on the lower end of this spectrum, while larger commercial projects are on the higher end. Additional expenses may arise from project delays, which should be considered when estimating the total cost of builders risk insurance.
Which insurance is best for contractors?
General liability and builders risk are two of the most common insurance coverages that a construction business may need to obtain. One reason is that clients frequently require a contractor to have both builders risk and general liability policies in place, especially for large jobs.
Why is builders risk insurance so expensive?
As mentioned, the cost of builder's risk insurance goes hand in hand with the cost of the construction or renovation project. Because a more expensive project poses a higher risk, businesses typically pay more for insurance.
How long does construction insurance last?
In most cases, completed operations coverage lasts for a period of 10 years after the completion of a project. Since the statute of repose for most states is 10 years, completed operations coverage protects contractors for the duration of their exposure.
Which type of insurance will cover the structure during construction?
In the simplest terms, builders risk insurance (also known as course of construction or inland marine coverage) insures a structure while under construction.
What is the difference between builders risk and homeowners insurance?
If someone purchases a vacant lot and builds a home on it, homeowners' coverage will not protect the home during the course of construction. During this stage of construction, it is covered by a builder's risk insurance. Once the house is finished, the owner's homeowners insurance takes over protection.
How to calculate construction insurance?
Here's how to do it: Percentage of Construction Cost: Typically, builders risk insurance premiums range from 1-4% of the total construction cost. This cost includes materials, labor, and any soft costs associated with the project. 1-4% Rule: Use this rule to calculate a rough estimate of your premium.
Is new construction insurance cheaper?
New construction insurance is typically more affordable than it is for older homes.
Does builders risk insurance cover hurricanes?
Natural disasters come in the form of windstorms, hurricanes, lightning, floods, and fires. This type of insurance covers such disasters – although you may have to pay more in premiums based on your geographic location.
Does my insurance cover contractors?
With many insurance companies, you have to pay to cover independent contractors as if they were your employees, as well as pay a higher rate for “uninsured subcontractors.” We suggest talking with your insurance broker to determine how your independent contractors or “uninsured subcontractors” will be charged upfront ...
Should I get insurance as an independent contractor?
As a 1099 contractor, it's important to have the right insurance protection. You can get sued just as easily as any other small business owner, and liability claims can be very expensive. If you don't have coverage, and a client or customer sues you, you'll have to pay the costs out of pocket.
How much is construction insurance per month?
Between $55 and $212 per month. Per occurrence limit: $300,000 to $1 million, depending on your policy (“Per occurrence” refers to the most amount of money you'll receive after a field claim is approved).
Who provides builders risk insurance?
- Chubb. Best Builders Risk Insurance Overall. Call: (877) 450-0321.
- State Farm. Best Builders Risk for Homeowners & Owner-Builders. Call: (877) 450-0321.
Do you need construction insurance?
Because the risk of bodily injury and physical damage to property is much higher in construction than in other industries, general liability should be an essential part of your construction insurance coverage. Your clients may even require you to carry this coverage in order to complete construction projects.
Why is construction insurance so expensive?
For example, projects done in areas highly prone to natural disasters will generally incur higher premiums due to the higher chance of damage and losses. Additionally, highly complex projects that involve unique components may attract higher premiums because the materials would be harder to repair or replace.
Does builder's risk cover labor?
Builders risk coverage can include protection for construction materials, heating and air-conditioning equipment, labor costs and expenses as well as temporary structures such as cribbing, false work, fencing, scaffolding, construction signs and even trees and other plants.
How to calculate building coverage for insurance?
- Measure the length and width of the building's footprint.
- Multiply the length by the width to get the total footprint area.
- Add the areas of any overhanging structures or additional levels.
Is builders risk insurance more expensive than homeowners insurance?
All risk insurance policies will generally be more expensive than other property insurance policies due to their broader coverage. Homeowners should weigh their needs for comprehensive coverage with the associated costs.
How much does OCIP insurance cost?
The cost for CCIP and OCIP coverage typically varies from 2% to 12% of construction costs. The actual premium is based on various risk factors, including policy limits, types of coverage, project location, type of construction, and value of the project.