Shop for homeowners insurance before closing, insure for full replacement cost, and confirm your builder's warranty is separate from your insurance policy.
The Short Answer
Get homeowners insurance in place before you close on a newly built home, and insure it for full replacement cost. Your lender will require proof of coverage, and a new construction policy should reflect the actual cost to rebuild, not the land value.
Timing Your New Construction Policy
Start your insurance shopping as soon as you have a closing date, and have your agent issue a binder before you close. Your lender needs proof of insurance before funding, and the binder satisfies that requirement.
During construction, the builder typically carries builder's risk insurance to protect the home while it is being built. That coverage ends at closing, which is exactly when your homeowners policy needs to begin. Confirm the transition so there is no gap in coverage.
Insuring a New Home Correctly
Insure your new home for its full replacement cost, which is the cost to rebuild the structure today. For a newly built home, that is usually close to the construction cost, but it can differ from the sale price once land value is included.
Ask your agent to run a replacement cost estimate based on the home's square footage and finishes. Also confirm that your builder's warranty is a separate contract covering workmanship and materials, because it does not replace your insurance policy and your insurance does not replace the warranty.
Smarty's Advice Expert Insight
John Smart (Smarty) · Smarty Home Solutions / eXp Realty Agent, AI Certified Agent
Plan Insurance Before the Build Finishes
Line up your homeowners policy before closing and coordinate the transition from the builder's coverage. Insure for full replacement cost and keep your builder's warranty separate.
John Smart, AI-Certified Agent with eXp Realty helps buyers of new construction across Greater Philadelphia close smoothly. Call 215-598-6848 or schedule a free consultation.