Whether you’re a first-time homebuyer or a seasoned homeowner looking to upgrade to a newer home, your mortgage lender will require you to get home insurance for the new property. Homeowners insurance comprises some crucial coverages that will protect the dwelling’s structure, your personal property, liability and more.
If you’re in the process of closing on the property, now is the time to start shopping around to insure your investment — even if it’s still under construction. The good news is that insurance companies are partial to newly constructed homes, so they’re cheaper to insure than an older home.
Consult our guide to finding insurance for a brand new house, and the best ways to save even more on your insurance rate.
New builds and home insurance — table of contents:
- How much is insurance for a newly built home?
- Which company has the best rate for a new home?
- Insurance during the construction of a new home
- How to save on your premium
How much does home insurance cost for new constructions?
The newer the home, the cheaper it will be to insure. The price difference in insuring a new construction versus a 10-year-old house is 45%. Rates climb incrementally as the home ages through the decades.
Compared to a home built in 1990, you can save more than $500 a year in insurance costs by opting for a new build. Learn more about our rate-gathering methodology.
AVERAGE HOMEOWNERS INSURANCE RATES BY HOME AGE
| Age of Home | Average Annual Premium | Monthly Premium | % Difference |
|---|---|---|---|
| New Construction | $889 | $74 | - |
| 10 Years Old | $1,289 | $107 | 45% |
| 20 Years Old | $1,406 | $117 | 9% |
| 30 Years Old | $1,432 | $119 | 2% |
If you’re looking to buy a new construction home, you’re in luck; insurance companies favor covering new homes because everything is new — from foundation to roof — and thus, comes with lower risk profiles. Insurers charge lower premiums for newly built homes since these properties are much less likely to suffer from issues that tend to afflict older homes; things like faulty wiring and crumbling roofs are more likely to cause damage that would warrant insurance involvement. Apart from weather-related claims, insurance companies don’t anticipate the owner of a brand new home will need to file a property claim anytime soon.
New construction home insurance rates by company
Whenyour home was built is a relatively small piece of the pie when companies calculate insurance quotes, but it remains a factor nonetheless. On average, you can expect to pay $74 per month to insure a new build.
See more in the table below to see a breakdown of rates by the insurance company and the age of the home.
AVERAGE PREMIUMS BY HOME AGE AND INSURANCE COMPANY
| Insurance Company | New Construction | 10 Years Old | 20 Years Old | 30 Years Old |
|---|---|---|---|---|
| Allstate | $910 | $1,340 | $1,392 | $1,401 |
| Farmers | $1,244 | $1,706 | $1,860 | $1,860 |
| Liberty Mutual | $919 | $1,357 | $1,463 | $1,578 |
| Nationwide | $830 | $1,262 | $1,414 | $1,446 |
| Progressive | $827 | $1,468 | $1,790 | $1,885 |
| State Farm | $848 | $1,302 | $1,461 | $1,463 |
| Travelers | $830 | $1,361 | $1,476 | $1,461 |
| USAA | $770 | $1,286 | $1,534 | $1,551 |
The cheapest company for a new build home was USAA, with an average monthly payment of just $64 — $10 less than the national average. If you don’t qualify for USAA, consider Progressive, Nationwide and Travelers as alternatives — these insurance companies charge approximately $4 more per month than does USAA.
Find out who the cheapest insurer is for your new construction by entering your ZIP code below to get quotes and compare them side-by-side.
Compare quotes to find the most affordable rate for your new home.
Builders risk insurance: coverage for homes under construction
If your new abode is being freshly built for you, there’s an additional consideration to be mindful of — protecting your property while it’s under construction. A standard homeowners insurance policy may exclude coverage for damages incurred while the home is being built. Consult your insurance agent to verify whether or not your policy offers coverage under these circumstances.
Construction sites can be prone to perils like vandalism and theft, so your insurance company could require that you add builders risk insurance (also known as course of construction insurance) as a policy add-on to cover your dwelling under construction or if you’re embarking on a major construction project or remodel.
Builders risk provides protection for:
- The physical structure of the dwelling
- Building materials
- On-site and off-site equipment
A builders risk policy offers much less coverage than a typical homeowners policy as it’s intended to be temporary. It doesnotinclude coverage for:
- Liability (this could be covered if your general contractor carries insurance, which includes liability coverage in case of injuries and/or property damage)
- Personal property
- Additional living expenses
- Medical payments to others
Once the new house is completed, reassess the home’s replacement cost and update your insurance coverage to a standard policy. Learn more about what home insurance covers.
The best ways to save on home insurance
One of the best ways to avoid overpaying is to shop for a new policy regularly, and don't be afraid to make the switch if another company is offering a cheaper deal. Even with discounts, there's a chance you can get a better rate elsewhere as some insurers are just more expensive than others. See below for more expert tips on how to save.
Bundle multiple policies with one company
A bundling discount is one of the more common discounts that can be found at most insurance companies. Already have auto insurance? Look into bundling home insurance and car insurance with the same insurer to save about $150 per year, on average.
Look for home insurance discounts
The number of discounts varies from company to company, and sometimes it may be built into your rate when you shop around for quotes. While home insurance discounts tend to be quite small, they can add up. Here are some common discounts for homeowners insurance:
- Multi-policy and bundling
- New home construction or homebuyer
- Payments: Paperless, pay in full, EFT, automatic
- Claims-free
- Senior or mature homeowners
- Roof upgrade
- Home security and fire prevention system
- Smoke-free
Higher deductible = lower premium
As long as you’re comfortable paying a higher deductible (for homeowners insurance, this could be well into thousands of dollars) in the event of a covered loss, this is an easy way to lower your rate. Premiums and deductibles work inversely — raising one will lower the other, and vice versa.
Understand how claims work
Not every incident is worth filing a claim for, and it could be harder to find an insurance company willing to provide coverage if you have a history of losses. All property claims are tracked in a national database called the Comprehensive Loss Underwriting Exchange (CLUE) that insurance companies can access. In general, you should file a claim if repair or replacement costs exceed the deductible you’ll pay. Learn more about when to file a homeowners insurance claim.
Ready to see how much you can save? Use our comparison tool to compare rates from local and national homeowners insurance companies side-by-side.
