Builder's Risk Insurance for a Custom Home in Connecticut: What the Owner Needs Before the Teardown

Short answer: A homeowners policy does not cover a house under construction. During a teardown and new build, the project needs a builder's risk (course of construction) policy covering the structure, materials on site and in transit, and soft costs, plus the owner's own liability coverage while the site is not a residence. Owners of high-value Connecticut builds usually do better buying builder's risk themselves, through a private-client carrier that can convert it to a homeowners policy at completion, rather than relying on the builder's policy.

Why the homeowners policy stops working

Homeowners policies insure a completed, occupied dwelling. Once a house is demolished or gutted, there is no covered dwelling, and vacancy and construction exclusions apply. Even on a major renovation of an existing house, insurers need to be told, and may require a different form. See home renovations and your Connecticut policy for the renovation case.

What builder's risk should cover

• The structure as it is built, at full completed value, including owner-supplied materials and finishes.
• Materials stored off-site and in transit, such as millwork, stone and custom windows that may sit in a warehouse for months.
• Theft and vandalism, including copper and appliances.
• Soft costs: extra interest on construction loans, architect and permit fees, and rent for temporary housing if a loss delays completion.
• Testing and commissioning of mechanical systems, which some forms exclude.
• Flood and named storm for shoreline builds, often a separate negotiation; the NFIP has limited coverage for buildings under construction.

Owner-purchased versus contractor-purchased

Contractors often carry builder's risk on a blanket program with deductibles, limits and exclusions designed for their business, not your house. An owner-controlled policy lets you set the limit to the true completed value, control the claim, and, with some private-client carriers, roll the policy into a high-value homeowners policy at completion without a coverage gap. Either way, the construction contract should say who buys it, who is named, and who pays the deductible.

Liability and the people on site

• Your general contractor should carry general liability, workers' compensation and an umbrella, and name you as an additional insured. Connecticut's principal-employer rules can expose owners and contractors to uninsured subcontractors' injuries; see uninsured subs and the premium audit.
• You need owner's liability on the site itself, especially if it is vacant land during construction. Tell your umbrella carrier about the project.
• Neighbors' property: excavation and blasting near adjacent homes in dense areas like Westport or Greenwich can generate claims. Confirm the contractor's policy does not exclude subsidence.

Before you sign the construction contract

• Agree who buys builder's risk and at what completed value.
• Collect certificates and endorsements from the GC and major subs.
• Plan the conversion date to a homeowners policy, and the alarm, water shutoff and temperature monitoring the new home will need.

New England Insurance, an independent Connecticut agency in Bridgeport since 2012, places owner-controlled builder's risk for custom homes and coordinates the move to high-value homeowners coverage at completion. Request a review before demolition.