You certainly don't want to leave it un- or under-insured, catastrophic fire is always a risk, more so during construction. We paid about a 20% premium (over owner-occupied) for coverage while the house was empty during remodeling. I suspect negotiating a value in the event of a fire would have been a nightmare, but fortunately that didn't come to pass. Our agent had no trouble placing the coverage, it seemed like a pretty routine thing. I thought the few hundred dollars involved was well worth it.

The reply from the insurance company will probably depend on the experience of the local agent. If they haven't seen it done they may think they can't write a policy.

I may be simplifying things a little, but I don't know why you can't just get a normal insurance policy for a 2nd home. Is it not possible/legal to occupy the house, or are you just waiting? If its all right to occupy then its just your 2nd home, which is a very common situation. If you just brought a bed over there and stayed one night month you can call it your vacation home.

Bruce