Insuring Your Future

Building a new home is one of life’s greatest milestones and achievements. Ensuring that you obtain and maintain the appropriate coverage is paramount to protecting your investment and future. Below is a guide to help homebuyers understand the fundamentals of Homeowners insurance, as well as the specific insurance required to build a new home with Wiseman.

INSURANCE REQUIREMENTS & COVERAGE TYPES

Builder’s Risk Insurance
When securing a construction-to-permanent loan to build your new home, Wiseman requires that the homebuyer secure a builder’s risk policy specifically for the course of construction. This particular policy helps protect new home construction from property damage due to the following:

• Fire
• Lightning
• Hail
• Explosions
• Theft
• Vandalism
• Acts of God, like hurricanes

Builder’s risk insurance can also help cover additional soft costs, or expenses not directly related to construction if property damage causes a delay. This can include:

• Lost sales
• Rental income
• Additional interest on loans
• Real estate taxes

Every builder’s risk insurance policy is different, so costs vary depending on what you need. A good rule of thumb is to choose coverage limits that are equal to the anticipated cost of construction.

Homeowners Insurance
This particular insurance is required by the mortgage lender when closing on any type of home. It protects your home and possessions against damage or theft and there is no one-size-fits-all coverage, so you will need to work with an experienced agent or broker to determine the correct policy for you.

• Coverage A: Damage to House AKA Dwelling Insurance
  This covers the structure of your home—from the foundation to the roof and all the critical components that make your house a safe place to shelter from the elements. Your Coverage A amount should equal the potential cost of rebuilding your home from the ground up.
• Coverage B: Other Structures
  This section of the policy covers your fence, driveway, swimming pool, shed, and other structures that are not part of your home. Carry an amount of Coverage B that is at least 10 percent of your Coverage A value. Ask your agent about any exclusions or limitations that might relate to your home.
• Coverage C: Personal Property
  Coverage C provides financial protection for the valuable belongings in your home. Damage or loss of electronics, antiques, furniture, and clothing can be covered under this section of your policy. You can customize the amount of Personal Property coverage to match the value of your possessions.
• Coverage D: Additional Living Expenses
  Also known as “Loss of Use” insurance, this pays for unexpected living expenses when a covered peril forces you out of your home. These expenses include a hotel stay, dining, and boarding pets.
• Coverage E: Personal Liability
  This coverage is beneficial if a person accidentally suffers an injury while on your property. It is directed toward protecting your finances should you face a lawsuit.
• Coverage F: Medical Expenses
  This coverage is beneficial if a person accidentally suffers an injury while on your property and is designed to avoid lawsuits by covering medical bills for minor injuries.

Flood Insurance
Flood insurance is a separate policy designed to help protect your home and belongings if they are damaged in a flood. Homeowners insurance does not cover flood damage. If your home is going to be built on land that is at high risk of flooding, your lender may require you to purchase flood insurance. With Houston’s high susceptibility to flooding, it is strongly encouraged to purchase flood insurance even if your lender does not require the policy.

• Building Property Coverage
  Helps protect the physical structure of your home and its foundation, as well as plumbing and electrical systems, central air and heating systems, cabinets and paneling, and a detached garage. The maximum coverage limit is $250,000.
• Personal Contents Coverage
  Helps protect the clothing, furniture, electronics, curtains, some portable appliances, freezers, and the foods within them, and certain valuables. The maximum coverage limit is $100,000.