Building or Remodeling a Home? The Insurance Checklist Every Homeowner (and Builder) Needs

If you're researching custom home builders — whether you found a firm like Arae Builders online or got a referral from a neighbor — you're probably deep in a spreadsheet of floor plans, finish selections, and cost-per-square-foot estimates. Insurance is rarely the exciting part of the process. But a construction project is one of the few times in your life when a large, valuable, partially finished asset sits exposed to weather, theft, and accidents for months at a time.

Standard homeowners policies weren't built for that scenario. Below is a plain-English walkthrough of what actually changes when you build or renovate, what questions to ask your contractor, and how to make sure your coverage keeps pace with the project.

Why Your Homeowners Policy May Not Be Enough

A typical homeowners policy is written for a finished, occupied dwelling. Once you start a major project, a few assumptions behind that policy start to break down:

The structure may be unfinished or open to the elements. Framing without a roof, missing windows, and exposed subfloor all raise the risk of water and wind damage.
The home may be unoccupied. Many policies limit or exclude certain losses when a home sits vacant beyond a set number of days — often 30 or 60.
The value is changing. If you're adding 800 square feet, your dwelling coverage limit from three years ago probably doesn't reflect what it would cost to rebuild the finished home.
Materials aren't part of the house yet. Lumber, cabinets, appliances, and fixtures sitting in the driveway or garage are a common theft target and may not be covered the way you'd assume.

None of this means your policy is worthless during construction. It means you should call your agent before work starts, not after a claim.

Builder's Risk Insurance: The Project-Specific Policy

Builder's risk (sometimes called course-of-construction coverage) is designed for exactly this window of time. It generally covers the structure while it's being built, along with materials and supplies intended to become part of the finished project.

A few things to understand about how it typically works:

It's temporary. Policies are usually written for the expected project duration — six months, twelve months — with the option to extend if the timeline slips. Construction timelines slip often, so know how extensions work before you need one.
Someone has to buy it. On a custom build, the contract between you and the builder should spell out who carries builder's risk and who is named on the policy. Don't assume. Read the contract, and if it's ambiguous, ask for it in writing.
Coverage limits are usually based on completed value. That's the total projected cost of the finished structure, not what's been built so far.
Exclusions matter. Many builder's risk forms exclude things like faulty workmanship, earth movement, or flood unless specifically added. Ask what's excluded, then decide whether you want to buy back any of it.

For smaller remodels, an endorsement to your existing homeowners policy may be enough. For a ground-up build or a gut renovation, a separate builder's risk policy is usually the cleaner solution.

Verifying Your Contractor's Insurance (Do This Every Time)

This is the single highest-value thing a homeowner can do before signing a construction contract, and it takes about ten minutes.

Ask for a certificate of insurance (COI) sent directly from the contractor's insurance agent — not a PDF forwarded from the contractor. You're looking for:

General liability coverage. This responds if the contractor damages your property or someone is injured because of their work.
Workers' compensation. If an uninsured worker is hurt on your property, you may find yourself pulled into the claim. Requirements vary by state and by how the crew is classified, so ask directly.
Commercial auto. Trucks and trailers moving in and out of your driveway daily.
Policy dates that cover your entire project. A certificate expiring next month doesn't help you in month seven.

Also ask whether subcontractors carry their own coverage. A well-run general contractor collects certificates from every sub and can produce them on request. If that question produces a long pause, treat it as useful information.

What to Do When the Project Wraps

This is the step people forget. You've just increased the replacement cost of your home — sometimes substantially — and your policy limits haven't moved.

After the final walkthrough:

Update your dwelling coverage to reflect the new replacement cost, including the addition, upgraded finishes, and any structural changes.
Reassess personal property limits. New appliances, built-ins, and furnishings add up.
Ask about new discounts. A new roof, updated electrical or plumbing, an alarm system, or impact-resistant windows may affect your pricing.
Document everything. Photos of every room, a copy of the final plans, and receipts for major components make any future claim dramatically easier.
Revisit liability limits. A higher-value home is a reason to look at whether an umbrella policy makes sense.

If You're the Builder, Not the Homeowner

Construction firms carry a different stack of coverage entirely. A typical contractor's program includes general liability, workers' compensation, commercial auto for the fleet, inland marine or tools-and-equipment coverage for gear that travels, and often an umbrella policy sitting on top. Many builders also need surety bonds to bid on certain jobs, and licensing requirements differ from state to state.

The wrong move is treating the certificate of insurance as a box to check for clients. Coverage should match how the business actually operates — the trades you self-perform, the value of jobs you take, your payroll, and how much you subcontract out.

The Bottom Line

A construction project is a temporary but significant change in your risk profile, and insurance policies don't adjust themselves. Two conversations — one before the first shovel hits dirt, one after the final inspection — will cover most of what matters.

If you're planning a build or a major remodel and you're not sure whether your current policy holds up, reach out to Top Insurance Services. Let's review your existing coverage, talk through builder's risk options, and help you make sure the finished home is insured for what it's actually worth.