Homewoner insurance and builder risk insurance question

pds22September 7, 2012

Trying to understand what's needed or no as I'm tearing down a very old home (not occupied) and building a new home. Am renting an apartment and will rent until the construction is done.

Mortgage company has said need I builder's risk insurance for which I've contacted Zurich to obtain quote.

General contractor will also be adding me as additional insured for the construction with his liability insurance, e.g. certificate of liability insurance.

So then do I need to also get homeowner's insurance as well? An insurance broker said I also need this for liability purposes. But I thought I'm covered by the general contractor or am I really not?

Is this something that everyone also purchases in addition, but then what insurance company do I get a quote a homeowner insurance for a house that is going to be built not already existing?

Appreciate any help. TIA

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My builders risk has liability on it. You cannot get homeowners if there is not a dwelling or at least a structure that has lockable windows and doors. When we bought our lot we had liability insurance on it through another home we owned. Land you own is grandfathered into your Home owners until you break ground.

However, I am not sure how this would work with a tear down. Can your bank give you direction. I know mine had requirements.

    Bookmark   September 7, 2012 at 7:18PM
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Would yuo mind replying with name of insurance company that offered both liability and builder's risk?

Bank directed me to their in-house insurance broker. Hence my leeriness right now as they will only do complete end-to-end insurance, i.e. home + auto. And the broker noted that I needed a homeowners policy for liability coverage. Seemed odd that I'd have homeowners for house not built.

    Bookmark   September 7, 2012 at 8:03PM
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I used state farm.

    Bookmark   September 7, 2012 at 9:38PM
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You can get renter's insurance that has liability with it. We are requiring it for tenants that have dogs. You should have it since you are renting.

    Bookmark   September 9, 2012 at 12:42AM
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Your builders risk policy is a homeowner's policy minus personal property coverages that are generally 70 - 75% of the dwelling coverage. Your personal property won't be there and won't need as much coverage at this location. You should definately have a renters policy for your personal property at the unit you are renting and yes it will have some liability as well. You will want your own liability coverage in the event someone walks on your property and gets hurt or a child falls into a whole/basement/well etc. As materials are delivered they will be covered which is very important. Theives like to go ahead and help themselves to materials. Fire is also covered, I had a customer do what your doing and each time he got close to being done, the house burned down to the ground. Needless to say, he didn't build again but can't sell the property neither. There will be other coverage's but that will depend on which state your in and the policy coverage's issued there.

    Bookmark   September 10, 2012 at 10:42AM
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I think at this point it would be good for the OP to know what coverage #'s we are all generalizing about.

In our own situation: we chose a BR @ contracted construction building costs with materials & parts at 50% of that cost + Liability which matches our builder's insurance for injury on a per case basis.

Example of coverage would be:

Construction cost (fire/damage): $500K
Materials/parts (thieves): $250K
Liability: $1M per injury

    Bookmark   September 10, 2012 at 12:08PM
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It seems insurance questions pop up on a regular basis, and a lot of bad advice is always given. Some good, but there always seems to be someone who gives bad advice.
If your insurance agent recommends you get a liability policy for the tear-down, you should get it. It seems you don't trust him because you brought the question to this forum, other wise you would have just bought it and be done with it.
Concerning the new build, we write a homeowner's policy that starts on the day of the closing of the construction loan. It provides the liability and builder's risk that you need while keeping the bank happy.

    Bookmark   September 10, 2012 at 4:33PM
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Can someone please give me a ballpark of what these policies cost as a % of construction budget - or just an rough order of magnitude for these policies (examples of what your build budget is/was and what your policy cost you to cover through construction)

Our build budget is just under $700K - excluding the land - that we bought some time back and tore an old house down as the OP was doing.

    Bookmark   August 25, 2013 at 4:34PM
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