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Private Risk

Building a Home Starts with Understanding Homeowners Insurance

Madelyn Newland
Madelyn Newland
Client Executive, Property Casualty

When you’re building a new house, it might seem counterintuitive to start thinking about homeowners insurance before you’ve even broken ground — but talking to an insurance agent about what coverage you’ll need should be a top priority for your dream home.

Builder’s Risk Policy: Who’s Responsible?

When you are building a new home, you will want to work with the builder to confirm who will be carrying the builder’s risk policy. This is the policy that is in place until the home construction is completed. It has become more common for homebuilders to want the builder’s risk policy to belong to the homeowners while the home is under construction instead of being purchased by the builders. Keep this in mind as you consider construction partners and your overall budget.

Location Might Cost You More

Insurance companies can decide to charge more for homeowners insurance or not be willing to write insurance depending on the location.

For example: If you build a home located in Florida, there might be fewer companies willing to quote your insurance because of insurance companies limiting their Florida exposure due to natural disasters, like hurricanes.

Another tough location to be insured is in or around mountains, such as in Colorado, due to increased wildfire concern.

A common issue we see in the Midwest are homes built outside of city limits. This can cause issues when there is not a fire hydrant within 1,000 feet of the house or a fire department is more than five miles from the home. This exposure can lead to a limited number of insurance companies and/or expensive insurance premiums.

Right Roof Over Your Head

It’s also becoming more common for insurance companies to avoid working with clients that have metal or wooden roofs. Even if they are willing to insure these two roof types, you might find yourself with high wind and hail deductibles to offset the higher risk exposure. When possible, it’s recommended to use asphalt or slate for your roof.

Risk Management to Enhance Your Homeowners Insurance Policy

When building a home, you can include risk management features into your homeownership plans. Here are some common risk management features to consider based on home values.

Burglar/Fire Alarms

For homes of any value, a central reporting fire/burglar alarm is recommended. A big advantage of the central fire alarm is that it will notify your local fire department of a fire even when you’re not home. With this in place, you can save valuable time and money instead of hoping your neighbors notice smoke or fire coming from your house.

Additional features you can include with a fire/burglar alarm system include:

  • Signal continuity — This provides uninterrupted communication with the central station in the event that primary communication is interrupted.
  • Low temperature monitor — This will alert you if your home drops below a certain temperature. It’s helpful to have in secondary homes and can help avoid pipes breaking from freezing.

Protection Devices and Systems

In addition to the above, there are also several other systems you can consider:

  • Water leak detection system — The device will alert you if there is unusual waterflow or a constant waterflow in your home. It will also automatically shut the water off to help avoid large water losses. This system can result in a large discount on your homeowners premium.
  • Residential sprinkler system — A sprinkler system can help avoid a large fire in your home.
  • Lightning protection system — This is used to prevent or reduce lightning strike damage to your home.
  • External perimeter gate — A credit for this can be applied to your insurance, if there is a perimeter gate to enter your home/property.

Work with Private Risk Experts!

If you’re ready to learn more about maximizing your homeowners insurance and risk management options as you plan your dream home, reach out to us to start a conversation or check out our other private risk solutions.

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