Course of Construction/Builder's Risk Insurance

AngeliqueS · November 21, 2015, 08:17:38 AM

Hello,

My husband and I are planning on starting our build in the spring (20x34 2-story). I've already spoken to my insurance agent about insuring the building as we go through the building process. She asked who would be building it and when I responded that we would, she stated that very few insurers are willing to insure owner/builders. Those that would, typically put a 90 day restriction on the policy, as in we would need to complete the build in 90 days.

Has anyone here had issues getting insurance on their build?

Thanks.

Dave Sparks · November 21, 2015, 11:37:08 AM

It was impossible to get for us back then. It is looking like keeping our fire insurance now will be more than we feel it is worth.
We are lucky that the house has been tested in a major wildfire and we learned a lot from a fire chief who spent the night here.

One thing you might try is a company named Foremost. They insured our RV then and we added $500K of liability when we were building.

The other thing, if you can get insurance for 90 days, plan to be ready to have the materials delivered and mostly installed during the 90 days.
Even if you do not finish, the real risk of theft is when the materials are stacked there ready to steal. After that, it is more fire risk and vandalism. That is why many owner builders just live there in an RV until the home is habitable. Good Luck!

November 21, 2015, 12:26:46 PM

Quote from: AngeliqueS on November 21, 2015, 08:17:38 AM
Hello,

My husband and I are planning on starting our build in the spring (20x34 2-story). I've already spoken to my insurance agent about insuring the building as we go through the building process. She asked who would be building it and when I responded that we would, she stated that very few insurers are willing to insure owner/builders. Those that would, typically put a 90 day restriction on the policy, as in we would need to complete the build in 90 days.

Has anyone here had issues getting insurance on their build?

Thanks.

Our regular insurance company Farmer Alliance would not when we started building - my independent agent put it on Auto Owners while under construction - then when completed it rolled back under Farmers Alliance when completed. Auto Owners when completed was crazy expensive at move in. Very reasonable during construction. They did want it finished in a year but would review at that point Not all insurance companies use the same underwriters and their risk figures varies greatly.... I think the key is finding a good independent agent that works with you and for you. We have been so lucky there!!

With our agent I was very up front - I am insured as far as medical - I am also retired. But I hired a guy up here to help me frame that is uninsured - sort of a handyman that has done it all. Great to work with. Agent checked said he would be okay but any subs like roofers - HVAC - plumbers - electricians need to understand they need to furnish their own insurance and not a bad idea to make sure they have a current copy of their insurance and bonding if required when in the job site.

Our greatest problem was getting liability on a bare ground ranch (no buildings) ....... my insurance agent and an attorney were all screaming we were hung out there a mile..... I told my agent well find some. He said that is the problem no one will underwrite it. Then he happened to think of Farmer Alliance who he knew about because it is a small part of Farmers Insurance back when he sold for Farmers and was the district manager for them here.

AngeliqueS · November 21, 2015, 03:42:09 PM

Thanks for the replies.

We currently have liability insurance on the property. We are putting up a shed and have a "dwelling" policy with liability insurance and property insurance on the shed.

We will have our travel trailer on the property come the spring. I believe our town(ship) has ordinances against living in travel trailers. We'll be keeping an apartment in town so we can shower and keep storing all our things as they wouldn't all fit in the RV and we'll need to keep an actual residence until we get a certificate of occupancy. I think the liability insurance would be much cheaper as an extension to the RV policy than on the dwelling policy. Once the trailer is there, I'll look for prices.

I'm really more concerned about thefts of materials, vandalism and fire. It won't be a huge issue if we are there everyday, but it is very possible for us to leave for several days at a time. We wouldn't want anything to happen while we're away. The Auto Owners seemed like a good lead, but unfortunately, they do not write in NYS. I'll speak to my agent again in the next few months to get some more information. I think if we can get 90 days for theft of materials, once that is up, we can maybe look for another policy for fire that will give us more than 90 days. I just can't see a situation where we'd finish building a house in 90 days.

SouthernTier · November 23, 2015, 01:58:59 PM

What part of NYS are you in if you don't mind asking? I was thinking of looking for something like this when starting next year, but it seems like it will be tough to find. I am in the western southern tier area.

November 24, 2015, 07:38:04 AM

State Farm was the only one that would insure our DIY build. We panicked when we found out 11 months later that they would only offer construction insurance for one year! For some reason (even the agent was surprised) they decided to renew our plan. We had protection of the buildings and materials, plus liability, but they said that subcontractors had to have their own insurance. I asked for proof from the few subs we used.

rick91351 · November 24, 2015, 09:58:13 AM

Quote from: MushCreek on November 24, 2015, 07:38:04 AM
State Farm was the only one that would insure our DIY build. We panicked when we found out 11 months later that they would only offer construction insurance for one year! For some reason (even the agent was surprised) they decided to renew our plan. We had protection of the buildings and materials, plus liability, but they said that subcontractors had to have their own insurance. I asked for proof from the few subs we used.

Thanks MushCreek forgot about State Farm!! We really need to get a list of insurances that will insure owner builder, as well bare ground or raw ground.... Not to promote but this worked of us......

Key to insurance is if you can no longer underwrite you own losses - then you need it. Pretty basically from the time the framing package arrives on the job site. From hang here over the years - 99.9% of the people on this forum can not stand the loss or replace and get started again in case of fire - flood - lightning - high winds (basic acts of god). Doubtful Bill Gates, Warren Buffet nor a more realist CEO knocking down a nice salary is going to tackle a DIY cabin - house or even a garden shed...... just say'n

Don_P · November 24, 2015, 11:20:14 PM

Interesting about SF... they carried my contractor's liability for some years. Then they started dropping contractors and at least ~5 years ago, according to my agent they stopped contractor coverage. My agent kept me covered as an artisan, it kind of fits. That worked fine until on one job we needed to use the community common area to set up a bandmill. The next thing I knew the emails were flying, the community busybody was at work. The bandsawyer wasn't insured and I inquired of my agent if I could carry him for a week. The response came back that I was cancelled effective immediately. I had several dollars of built stuff twisting in the breeze for about a week as we scrambled for cover, Sheesh!
... and then they are happy to cover an amateur, no offense intended, but, that don't make a lick of sense

.

MushCreek · November 25, 2015, 07:25:31 AM

None taken- I'm about as amateur as they come as a builder! No love lost here for insurance companies. Despite no hurricane direct hits in our part of FL, our homeowner's went up 400% in one year! Then, they all started bailing out of FL altogether, leaving many people scrambling for insurance. The ONE TIME we had an insurance claim, they tried to weasel out of it, and we had to sue our insurance company for coverage.

November 25, 2015, 08:15:32 AM

Gotta love em, a few minutes of cruising DIY forums would probably give an actuary pause

.
I'm with Farm Bureau now which might be another one to try.
That is one point in deciding whether to get coverage, it is probably going to be a fight in the best of times. Many building codes come from the insurance industry, and code is the minimum standard. If the building is built beneath that minimum standard I doubt it and the liability is covered even if they accept payments.

rick91351 · November 25, 2015, 09:00:56 AM

Don_P I feel your pain

I was with Farmers for years and years - my folk before that - one reason was loyalty to a certain agent and the agency passed down through three generations. Then they started closing up old established agencies. Our agency was peddled off to another agent. We had no say in where or who - just a letter in the mail plus a notice of rate change. We fired them when we found another agent we could work. He was old Farmer manager we had known him and his wife personally for some years and now was working as an independent agent. The rates are so much better........

Everyone told me 'Oh go with AARP their insurance is so much cheaper and better' - I found myself pretty much uninsurable. Talking to them - my life style and being over 60, living on a ranch and the four wheelers drove the underwriters nuts. Pretty well was told my wife and I were too high risk. I took it a they felt that I should slow down move into town and I guess live in a rubber room in a retirement center and play Canasta and eat Jello. Sit on the front porch and cuss the democrats!

kbaum · November 25, 2015, 01:31:21 PM

I was planning on changing insurance and I was just about to sign my name on the dotted line and I was asked how close is the closest fire hydrant? I said 3/4 mile, agent said "OH" I asked what? She said the covered would increase $900 over my existing insurance. Guess what, I didn't sign and stayed with the my old insurance agency.

AngeliqueS · November 25, 2015, 05:20:34 PM

Quote from: SouthernTier on November 23, 2015, 01:58:59 PM
What part of NYS are you in if you don't mind asking? I was thinking of looking for something like this when starting next year, but it seems like it will be tough to find. I am in the western southern tier area.

We're in Chenango County.

Thank you to everyone posting. I will check out State Farm, but don't have much hope. I'm hoping that our current dwelling policy insurer will be willing to insure us when we start building... if not... well I guess we are SOL and will have to hope nothing happens.

rick91351 · November 25, 2015, 08:03:36 PM

Quote from: AngeliqueS on November 25, 2015, 05:20:34 PM
We're in Chenango County.

Thank you to everyone posting. I will check out State Farm, but don't have much hope. I'm hoping that our current dwelling policy insurer will be willing to insure us when we start building... if not... well I guess we are SOL and will have to hope nothing happens.

Keep on shopping

November 27, 2015, 10:49:07 AM

Quote from: AngeliqueS on November 25, 2015, 05:20:34 PM
We're in Chenango County.

Thank you to everyone posting. I will check out State Farm, but don't have much hope. I'm hoping that our current dwelling policy insurer will be willing to insure us when we start building... if not... well I guess we are SOL and will have to hope nothing happens.

Nothing usually happens BTW. I have over 83 offgrid home clients and none of them had problems. I think that if you have a good neighbor within a mile or so, bring them whatever they like! Prosecco, pastry, Canadian whiskey, good cigars, and fresh Kale.

We all hear the stories of people stealing a buried septic tank and I just think about how life was for my grandfather and these things we deal with now seem so trivial.

jsahara24 · November 28, 2015, 07:25:33 AM

Quote from: AngeliqueS on November 25, 2015, 05:20:34 PM
We're in Chenango County.

Thank you to everyone posting. I will check out State Farm, but don't have much hope. I'm hoping that our current dwelling policy insurer will be willing to insure us when we start building... if not... well I guess we are SOL and will have to hope nothing happens.

I'm building in Oswego county NY and I have a great agent who has covered my build. It's been two years and no issues with them. I increase the policy amount as I get more work done. If you interested I can get you their contact info.

Jason

SouthernTier · December 02, 2015, 10:09:43 AM

Jason:

If you could PM me with your info, that would be great. Insurance is so state-specific.

I hope to start building next year, but probably just the foundation and septic (that's 1/3 to 1/2 of the whole cost, so that's probably all I can afford that year anyway) so I am not worried too much about potential loss for that. However, in 2017 I'd frame and get it dried in and that's when I need the insurance. I figure not till 2018 until I get my CoO and then get regular homeowner's for the building.

But I'd be hanging out there in 2017 and part of 2018 without builder's risk insurance.

Thanks!

jsahara24 · December 03, 2015, 12:07:32 PM

PM's sent, good luck and let me know if you need anything else! I am anxious to get out of the "construction policy" and into a permanent one.

Jason

AngeliqueS · June 24, 2016, 07:39:06 AM

Thought I would give an update now that construction is in full swing. My broker found me two quotes. There were only two companies willing to insure due to the construction not being completed within 90 days and the fact that we had already started on the foundation. We gave an estimated completion date of "hopefully before the snow starts".

One quote was with minimal coverage and I needed to call them every time something major was completed to increase my limit. Price started off lower but would increase as we increased the limit.
Second quote is a regular homeowner's policy with an additional fee for it being under construction. Insures the full value of the completed home and has very comprehensive coverage. Also is taking care of the shed and liability, so we don't need to have a separate policy for that anymore. Also no reporting of major steps in completion, only need to let them know when we have occupancy. We went with this option.

For the NYers interested, send me a pm and I'll give details of companies, coverage and prices.