construction insurance

[danreed76]

Soon we'll be at the stage of our construction process where we start bringing wood into the picture (framing out the first floor and cutting the timber frame over the winter for a raising spring or early summer).  start bringing wood into the picture, obviously the stakes get higher for damage to the structure (fires, theft, etc.)

Early on, I started looking into "course of construction" insurance to protect us from any loss that could occur as a result of storms/vandalism/etc until we get a CO and homeowner's insurance.  Now that we're moving past the less destructible materials (steel and concrete) and into the more vulnerable stuff (wood, wire, etc.), I'm a bit more concerned.

Thus far, I've been able to find no companies that will insure an owner builder who is not a licensed contractor and is working without a construction loan.  The only one I have found requires enough cash bonded against the building (basically half the replacement value) plus a rather large premium, which would effectively drain my construction budget.

Any of y'all have any experience with this?

[bigshow]

when i first started, i wasnt carrying any insurance at all, then in the winter I could see quite clear evidence someone almost killed themselves by nearly running into my galvanized culvert in the ditch on a snowmobile.  I called my homeowners insurance company (I had another house in town still), and I told them what I was doing.  All they asked for was what I thought the house would be worth at the end, and boom - they set me up.  I grilled them about all these 'what if's' I had about construction and people getting hurt and they claimed I would be fine.  Now, I think the max injury I was setup for was 250k, and an umbrella policy for $10 more a month would've covered me for a million i think. 

Can I guarantee that I was 100% covered.  Well, I guess not - I never read all the fine print.  But I was covered for people screwing around on my property, tearing it up, getting hurt, etc without my permission at least.  And I did ask if people I was hiring to come out and work and getting hurt would be covered, and I was told yes.  But, I never had to stress test it.

So, in short - my homeowners insurance claimed to have my back.  No way of knowing 100%.

[logman]

I had no problems with both houses I built for ourselves.  My home in Md was with State Farm and here in NC thru Farm Bureau.  I insured both as soon as I got the frames up.

[witterbound]

Sounds like big shows coverage was for liability insurance.  I built in the country.  Our local insurance agent wrote me.  I also bought workers comp to cover others I hired to help.  Ins co looked at my credit score, claims history, and what else I owned before they would write me.  If the company isn't absolutely positive that the owner is a solid risk to insure, they will turn you down.  Just too much at risk for a small premium.   Or they will require that expensive bond you've been told about. 

[danreed76]

Thanks for the feedback, as always.  Reckon I'll give it another go making the rounds with the insurance companies.  Maybe once I get the frame up, they'll have a different perspective.

Bigshow: glad to see you hangin around these parts again; thought you'd turned your back on chisels, planes, and anything bigger than a 2x4 ;D   Hope y'all are enjoying that amazing house you built... How long did it take to get that balloon down anyhow?

[bigshow]

you know, its a year ago to the day of the great balloon crisis of 2012.  This year, I did fireworks instead for my boy's birthday.

But back on topic, just to be clear: I had the same concerns as you, and I simply just got another homeowners insurance policy while I was building.  Sure, I was paying ~800 a year for a structure that wasnt there yet, but I voiced my concerns and my agent claimed I was in the clear.  I am with State Farm.  Boy do I know that what applies for one person in one area does not apply to a person in another.  It seems like the people on this board tend to find a way, and do not give up easily (at all, ever, over our dead bodies, you'll never take us alive, etc...).

Turning my back on timberframing? Interesting question, I think I'm just getting started actually. 

[danreed76]

Glad to hear it.  What's the next project?

I'm just now getting ready to move all the timbers in the barn and spend the winter cutting.  I figure I'll start with the valley rafters since they seem like the most difficult (I cut a few extra timbers so I could afford to start over a time or two if needed).

If you decide to get out of the snow for a while, there'll be plenty of weeks spent on joinery and planing down here in the Southeast. 

[Thehardway]

I think the insurance question all depends on the agent and the area.  I tried to get construction insurance on mine while I was building and had no luck at all.  Even after I had it under roof and almost ready to move in, I had trouble because of my distance from a fire hydrant and fire company even though I have a lake right next to the house and the house is primarily made of concrete and it was not my primary residence at the time.

Insurance companies and banks seem to be less willing to write loans or policies for "non-conforming" projects.  If the agent can't make it fit the check boxes, they take a pass on it and move to conforming homes.  Easier for the actuarial and bean counters to calculate risks based on what they write consistently day in and day out.  Also insurance fraud is pretty high on stuff like stolen tools and building materials so they aren't eager to write those policies and if they do, it might be cheaper to replace some tools or materials than pay the premiums.

Once I moved in I had to talk to 3 different agencies before I found one to insure me.  I was a year without.

The bank wouldn't loan me money for the construction because it was "non-conforming" and was on more than 3 acres.

An option you might want to consider is just liability or an "Umbrella" policy which protects your assets should someone get hurt and hold you for liability.  It would cover you and your properties no matter where.

As for theft, vandalism, etc.  it might be cheaper to install a form of security than pay a policy. 

[Draco]

I also have State Farm with an umbrella (1M - 9.00/mo), because of boat and waterfront (liability).  My existing policies cover everything short of equipment/material being stolen.  A small, additional policy will cover that.

[Corley5]

I've had Farm Bureau Insurance on both my home building projects.  They just wanted dimensions, pictures and updates on progress.

[grweldon]

I called my homeowners insurance company (I had another house in town still), and I told them what I was doing.  All they asked for was what I thought the house would be worth at the end, and boom - they set me up.  I grilled them about all these 'what if's' I had about construction and people getting hurt and they claimed I would be fine.

Do you mind saying or PMing me your insurance company's name?  I can't even get liability at my farmhouse because it's not yet completed...

[bigshow]

oh, i didnt see this - but my insurance co is State Farm.

[grweldon]

Really... they wouldn't even consider me unless I had a construction loan or the house was finished.  Hurricane zone here 200 miles from the coast and after Katrina they are gunshy...