On the whole, insurance for custom homes is generally less expensive than insurance on existing homes because existing homes come with problems that new builds don’t. That said, the more you personalize your home and add unique features or luxury finishes, the greater of an effect that could have on your insurance premiums.
For example, adding pools and other luxury features can increase the cost of insurance. Building in remote areas could have similar effects, as could including fully updated and top-of-the-line appliances in kitchens, bathrooms, and other areas of the house. That said, many carriers give discounts for new homes, and homeowners insurance isn’t terribly expensive overall, even for homes with upscale features in South Carolina. Take your time finding the right policy at the right price. While you may not get coverage until just before closing, we can factor the anticipated cost into your target budget, as we will do with all other expenses associated with construction.
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Will Insurance for a Custom Home Be More Expensive?
Having insurance on your home is one of the most significant things you can do to protect yourself if disaster strikes after you move in. This coverage is crucial for all homeowners, whether they have purchased a previously existing house or built a custom one from the ground up. Many factors go into assessing insurance premiums for homes, and prospective buyers may wonder whether costs will be more expensive if they build their dream homes and outfit them as desired, complete with all the luxury finishes they want.
New Construction
Insurance on a new custom build might be less expensive than insurance on an existing property, depending on the situation. The materials being used to construct the structure may be newer and of a higher grade, increasing durability and reducing the risk to insure. Some insurance carriers even offer discounts on policies for new construction because of the lesser risk involved with insuring these properties compared to older ones with possibly outdated electrical or plumbing systems, among other problems. We take security on building sites seriously, taking the appropriate steps to protect high-quality materials from theft or weather damage as best as possible.
Custom Features
That said, new and custom designs enable heightened personalization, and this could affect insurance costs on a home. For example, while many clients want swimming pools and other features like fully outfitted outdoor kitchens incorporated into their properties, this could increase the price of premiums. As could the type of finishes included, like luxury marble countertops in kitchens or expansive bathrooms complete with oversized showers and separate soaking tubs.
Home Location
A custom home’s location could also affect the cost to insure. For example, suppose the location is relatively remote because the client is building an expansive home on several acres. In that case, insurance premiums may be more expensive because it could be hard to access in potential emergencies.
So, while insurance on a custom home is not automatically more expensive and, in many situations, might be less costly, especially compared to insurance on older homes, added personalization and incorporating riskier or luxury elements could potentially increase costs.
Building the Cost of Insurance into Targeted Budgets for Custom Home Builds
Though your homeowners’ insurance coverage won’t kick in until construction is complete, you can shop for policies during construction. Building the anticipated cost of those first insurance premiums into the targeted budget can prepare you for after closing.
Many factors go into identifying a target budget for a custom home build, and it often helps clients to consider the costs the while incur immediately after the build ends. One of those is the cost of insurance on the home. Though homeowners insurance is generally not too expensive overall, even for luxury homes, knowing where you will stand after closing might affect some of the final selections you choose for finishes, and we can make allowances in the budget for those decisions later on during walkthroughs of the site with vendors.
In addition to the cost of insurance, we will factor in the cost of materials, labor, obtaining permits, making land improvements, laying the foundation, framing the home, and applying all exterior and interior finishes. A new build requires implementing entire plumbing and electrical systems, and we will provide specifications and building costs for you early in the process before the pre-construction phase begins. We will make you aware of all decisions and selections that must be solidified at this point and, as mentioned, make allowances where possible and necessary.
Considering the cost of insurance and viewing it as part of the total budget can help you stay on track with your spending goals for your new home build. Beyond that, considering even the potential ongoing maintenance costs of the property, as well as moving expenses, property taxes, and possible HOA fees, depending on where you live, may ease some of the stress associated with identifying the right target budget.
Is the Insurance on My Custom Home Too Expensive?
While some elements of your custom home might put you in the riskier category of policyholders, like installing a pool and spa on the property, that does not mean your coverage should be unnecessarily expensive.
It’s good practice to get several quotes before settling on a new construction insurance policy for your home that will cover you while building and transition into a standard homeowners policy after construction is complete and you get your keys. This can enable you to compare premiums and carriers and decide which is best for you. For example, you can weigh different options and reject extra coverage that you don’t need to mitigate costs. This is best done at the beginning of the process so that you can take the time to do this without feeling rushed or pressured by any impending construction deadlines. That way, you can choose the policy that is the best price and with the best coverage and have it in place before we begin the pre-construction phase of building your custom home.
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