Coordinating insurance before, during and after construction

Tell your insurer what is actually happening

A homeowner policy lists covered items, limits, deductibles and exclusions, and what it covers depends on your contract. An ordinary homeowner policy is written for a home in normal use; do not assume that losses during construction fall within it.

When you contact your insurance agent or company, give the facts that change the risk: what work will be done, whether it touches the structure or adds space, how long it will take, whether anyone will live there during construction, and whether the home will sit empty for a while. A policy may have separate terms for vacant or unoccupied homes, so check the policy wording. The insurer uses this to decide whether the existing policy needs to be adjusted, endorsed or supplemented with other coverage.

Get the insurer's answer in writing where you can, such as an email confirmation or an endorsement, rather than relying on something said on the phone.

• Scope of work: structural changes, additions or demolition
• Schedule and who will live in the home during construction
• Limits, deductibles and exclusions in the current policy
• Written confirmation of any changes and their effective dates

What a contractor's certificate of insurance tells you

Massachusetts guidance on hiring a home improvement contractor includes checking the applicable registration, required licenses and proof of insurance. A common practice is to have the contractor's insurance agent issue a current Certificate of Insurance directly to you, and to check that the insured's name matches the party signing the contract, along with the types of coverage and the policy dates.

The certificate shows only what insurance the contractor has bought. It does not mean that any loss to your home will be paid. Which risks fall under which policy, who is the insured or loss payee, and whether you should be named as an additional insured are questions for an insurance professional to answer from the contract and the policies.

The coverage should run for the whole job. If the schedule slips, ask for an updated certificate before the policy expires. Whether major subcontractors must also provide certificates can be set in the contract.

• Certificate issued directly by the contractor's insurance agent
• Insured's name matches the party signing the contract
• Types of coverage and policy dates cover the whole job
• Insurance professional consulted on whether you should be an additional insured

Further questions for a new build or major renovation

During a new build or large renovation, the structure under construction and materials delivered but not yet installed are exposed to fire, storms and theft. Some projects carry separate property coverage for the work in progress, often called builder's risk. Whether it is needed, and whether the owner or the general contractor buys it, depends on the construction contract and any lender requirements, and is best settled before the contract is signed.

If there is a construction loan, the lender may set requirements for the amount of coverage and the loss payee; ask your loan officer for them in writing. Whoever buys the policy, ask whether the existing parts of the house are covered, whether materials in transit and stored on site count, what the deductible is, and when the policy ends.

• Which policy covers the work in progress and materials on site
• Contract states who buys the coverage and who pays for it
• Lender's insurance requirements in writing
• Whether the existing structure and materials in transit or on site are covered

Records and notice when something goes wrong on site

Keep records as you go so you have something to show if a loss occurs: dated progress photos, delivery slips for valuable materials and equipment, and signed change orders. In a fire, storm damage or theft, put personal safety first. If you smell gas, leave the building right away, and once outside call 911 and the gas company.

Then notify the insurer in the way and within the time the policy requires. Late notice can complicate the inspection and the claim.

Keep the related documents together in one project insurance file so you are not searching for them after a loss.

• Current policies: homeowner policy, construction-period property coverage and endorsements
• Certificates of insurance for the general contractor and major subcontractors
• Dated progress photos and delivery slips
• Incident records: police or fire reports and written correspondence with the insurer

Switching coverage at completion, move-in or rental

As the work nears completion, construction-period coverage needs to give way to a long-term policy. When a construction-period policy ends depends on its terms and may be tied to completion or to occupancy. Before moving back in, confirm with the insurer when each policy starts and ends so there is no gap between them.

If the work added space or new equipment, ask at the same time whether the coverage amount should change.

If the home will be rented out after completion, tell the insurer. A rental carries different risks from an owner-occupied home, and the insurer should confirm whether an endorsement is enough or a policy suited to a rental is needed.

• When and on what condition construction-period coverage ends
• Long-term policy start date aligned with move-in
• Coverage amount reflects the home after the work
• Insurer told of any rental use and the policy type confirmed