Rebuilding a home is a major undertaking, whether you’re repairing damage after a loss or adding new space. But many homeowners don’t realize that once construction begins, their homeowner’s insurance won’t cover parts of the structure that are being built or the materials being used.
That gap can leave you financially exposed at the exact moment your investment is most vulnerable. The answer is a “course of construction” policy, often added as a rider or endorsement to your existing homeowner’s coverage. This temporary protection fills the gap while your home is being rebuilt or renovated and ensures you don’t face out-of-pocket costs if something goes wrong during the work.
What homeowner’s insurance doesn’t cover during construction
A home under active construction is considered a higher-risk property. Walls may be open, heating systems may be off, materials may be stored outside and workers come and go daily.
Because of these conditions, homeowner’s insurance typically excludes damage that happens while the home is being built or significantly renovated. If, for example, building materials are stolen or damaged during storms, you would have to pay out of pocket for the cost.
Even a minor incident, like stolen lumber or a burst pipe in a gutted kitchen, can set your project back thousands of dollars. Larger events can leave you paying for rebuilding costs entirely on your own.
What policies cover
Course of construction insurance — sometimes called builder’s risk — steps in to protect the structure as it’s being rebuilt and the materials that will eventually become part of your home. Depending on your policy, it generally covers:
A course of construction policy will cover the following:
- Fire or smoke damage
- Storm damage, including wind or hail
- Burst pipes or water damage
- Theft of building materials
- Materials damaged in transit
- Vandalism or accidental damage to the structure
Some policies also offer optional protection for “soft costs,” such as additional permit fees or loan interest if the project is delayed due to a covered loss.
It’s important to note that this coverage protects your home and materials, not your contractor’s tools, equipment or workers. Contractors carry their own insurance for those exposures, including general liability, commercial property and workers’ compensation.
Your financial investment in the home itself is your responsibility. If a fire destroys half of the rebuild, the only policy that will cover the costs of replacing your structure and materials is course of construction insurance.
Protect your rebuild from day one
You should put coverage in place before any work begins. Lenders often require proof of a course of construction policy before releasing construction funds.
Even if you’re not using a loan, waiting until after demolition or framing starts can create a dangerous coverage gap.
The policy stays in effect until construction is complete and the home is ready for occupancy. Once you have a certificate of occupancy, we can help you transition back to a standard homeowner’s policy.
Rebuilding a home already comes with enough stress. A course of construction policy ensures that unexpected losses don’t derail your project or drain your savings.
If you’re planning to rebuild or undertake major renovations, contact us early in the process. We can discuss your options, recommend the right form of coverage and make sure you start construction with the protection you need.