Why Construction Insurance Should Be Arranged Before Building Begins

Building a new home, shop, garage, cabin, or major addition is an exciting project. Between securing permits, hiring contractors, and ordering materials, insurance is often one of the last things on a homeowner’s mind.

Unfortunately, waiting until construction is already underway can create significant challenges when trying to obtain insurance coverage.

Insurance Companies Want to Review Projects Before Construction Starts

Over the past several years, many insurance companies have tightened their underwriting requirements for homes and buildings under construction.

Today, many insurers require construction insurance to be arranged before work begins. In some cases, once a foundation has been poured or framing has started, standard insurance companies may decline the risk altogether.

The reason is simple: insurers want the opportunity to evaluate the project before construction begins.

This review often includes:

• Who is acting as the general contractor
• The experience and reputation of the builder
• Whether licensed electricians and plumbers are being used
• The scope and value of the project
• Construction timelines
• Overall project management and risk controls

Insurance companies know that projects managed by experienced and reputable contractors tend to experience fewer claims, fewer construction defects, and fewer costly delays. By reviewing these details upfront, they can better assess the risk and provide appropriate coverage.

Why Starting Before Arranging Insurance Can Create Problems

Once construction is already underway, insurers lose the ability to assess the project from day one.

At that point, they may have questions such as:

• Who completed the work that has already been done?
• Were proper inspections completed?
• Were licensed trades used throughout the project?
• Has any damage already occurred?
• Has the project been managed according to industry standards?

Even when nothing is wrong, these unanswered questions create additional uncertainty for the insurer.

As a result, many standard insurance companies simply won’t accept projects that have already started.

Specialty Insurance Often Means Higher Costs

When traditional insurance markets decline a partially completed project, homeowners are often forced to seek coverage through specialty insurance providers.

While these insurers can often help, the coverage typically comes with:

• Higher premiums
• Larger deductibles
• Additional underwriting requirements
• More restrictive coverage terms

What could have been a straightforward builders risk policy arranged before construction began can quickly become much more expensive.

What Is Builders Risk Insurance?

Builders Risk (also known as Course of Construction insurance) is designed to protect a project while it is being built.

Coverage may include protection against:

• Fire
• Wind and hail
• Theft of building materials
• Vandalism
• Certain types of water damage
• Damage to materials stored on-site

The policy protects the value of the project as construction progresses and can be one of the most important pieces of risk management during a build.

The Best Time to Call Your Broker

The best time to discuss insurance is before any work begins.

Whether you’re building a new home, a detached garage, a shop, a cabin, or a major addition, arranging coverage before construction starts gives you access to the widest range of insurance options and the most competitive pricing.

A quick conversation before the first shovel enters the ground can save considerable time, money, and frustration later.

Planning Ahead Protects Your Investment

Construction projects represent a significant investment of time and money.

Before the excavation equipment arrives, before the foundation is poured, and before the framing begins, make sure insurance is part of your planning process.

Getting coverage in place early allows insurers to properly evaluate the project, helps ensure you qualify for standard market rates, and provides peace of mind from the very beginning of the build.

If you’re planning a construction project this year, contact our team before construction begins. We’ll help ensure the proper coverage is in place from day one.

, and greater peace of mind throughout the project.

If you’re planning a construction project this year, reach out to our team before construction begins. We’ll help make sure the proper coverage is in place from day one.