Getting a partially built house insured

[joenorm]

Long story Short:

I did a cash out refi on my primary house early in the year, bought the lot next door to me, and have been building a new home over the summer.

The house is framed, with a roof, and windows are being installed.

Trouble is I never got around to looking into insurance, as I was building out of pocket. I figured when the time is right and I have enough $ sunk into this thing I'll get it insured.

I now have close to $100K into it so I called my insurance agent and they said it will be hard to impossible to insure on the "normal" market. She is now looking into other means but is warning me they will be expensive.

She said the companies want to be paid through the whole process so do not have interest in insuring something so far along.

My mistake, lesson leaned. Does anyone here have any suggestions on where to look for a reasonable insurance rate?

thanks!

[GizmoTX]

You want Builders Risk insurance. Only certain carriers offer it — we did this through an independent agency & will convert it to homeowners insurance when it’s finished. Yes, you should have done this at the start of your build, so you may find sources limited or more expensive if you’re the General Contractor. The price of  Builders Risk takes into account that value is being added throughout the build. We were charged 1 year’s premium & allowed 1 renewal, & expect a prorata refund when we finish before the insurance ends. In any event, make sure all subcontractors also have their own liability & worker insurance (see proof), & get a lien waiver for every bill that you pay.

[SwordGuy]

You want Builders Risk insurance. Only certain carriers offer it — we did this through an independent agency & will convert it to homeowners insurance when it’s finished. Yes, you should have done this at the start of your build, so you may find sources limited or more expensive if you’re the General Contractor. The price of  Builders Risk takes into account that value is being added throughout the build. We were charged 1 year’s premium & allowed 1 renewal, & expect a prorata refund when we finish before the insurance ends. In any event, make sure all subcontractors also have their own liability & worker insurance (see proof), & get a lien waiver for every bill that you pay.

If they give you grief over how long you've been building it, form an LLC, and re-title the house in the LLC's name the house to the LLC and have the LLC purchase the insurance, scheduled to go into effect the day the property closes.  Then the LLC will be insured on day one.    In NC, the retitling is cheap.   We've bought 2 houses that needed enough renovation that our regular insurer wouldn't handle it.   The insurance we get as a renovator is really cheap.

PM me if you want a contact to the agent we use.  May not be able to sell you a policy in your state, but he can tell you the exact name of the insurance product we're using.

[joenorm]

Interesting idea on the LLC.

I just got a quote back. $1,900 a year for the insurance starting now. This seems like a lot but since my primary homes insurance is wrapped into the mortgage I actually don't really know how far from normal this is.

[AccidentialMustache]

High for a 100k house, but that isn't what you have, so that isn't the risk profile you have either.

I'd guess that's ~4x the rate (insurance / home value) that I'm paying on the home we live in -- although our risk profile is also low. Midwest, small city, no oceans, no wildfire threats, not on a flood plain/etc.

[joenorm]

That number would get smaller after the house is deemed finished. It's just for the construction phase.

[Big]

I am in the insurance business.  Depending on the state and carriers, some may write as a homeowner's with builders risk endorsement attached.  Basically, after 1 year, the builder's risk endorsement falls off.  Call and independent agent, a larger one, if necessary and inquire about options.  Vacant express will probably write, if it is available to your agent, but the premium will be much higher than a homeowner's product with builders risk endorsement.