Insurance for New Home Construction in Lexington
Are you building a home? Buying insurance for new homes can be an intimidating venture, but as long as you know what you’re getting into, you can enjoy the process and be confident in your decisions.
Local builder Mungo Homes notes these reasons for building a new home. [ https://www.mungo.com/why-buy-new]
Once you’ve made the decision to build in Lexington or surrounding areas, what do you need to know about insurance for new homes?
- First and foremost, make sure you know what kind of insurance your lender may require before you purchase a lot. For example, your lender may require you to purchase flood insurance if the land you are considering is in or near a flood zone or builders risk insurance. Check before you sign a contract to ensure you don’t have any surprises after you start construction.
- Your builder’s insurance policy may not cover you. It likely only protects the builder in case, for instance, a tree falls on the home while it’s under construction. It could be worth your while to get a policy to cover your land and any belongings you might have on the property before you move in.
- If you are paying for the home in full at the closing, good for you. You won’t be required to have a homeowners’ insurance policy in place before the closing. Otherwise, your mortgage company will probably require proof that you have a year’s worth of insurance in place. The lender usually sets forth requirements for how much home insurance you should have – usually enough to rebuild the home from the ground up in case of disaster.
- Should you escrow? There’s no denying it’s more convenient to have an escrow account. However, a new construction home loan with an escrow account can be subject to a significant increase in monthly payments after the first year depending on how the escrow account was set up at closing. Make sure that your lender is basing your initial escrow account on the estimated property taxes for the improved property (the sales price) and not the unimproved value (the lot value). This will most likely result in an escrow surplus, but it will ensure your future payments stay relatively stable after an escrow analysis.
- Review and update your new home insurance policy frequently. After you move in, you might decide to add a deck or a porch or a pool to enjoy those hot Lexington, SC, summers. All of these things can affect your insurance premium or coverage. Even the addition of a home security system can influence your rates. Call your agent any time you make a change to make sure you are covered in case the unexpected happens.
Personal Lines Manager Rebekah Morris advises, “When buying insurance for new homes, don’t skimp. A bare-bones policy won’t adequately cover you in a loss, and the additional coverages are usually less expensive for new homes than they would be if you decided to add them later.”
If you’re still in the early phases of your home-building process and looking for a builder, you might want to check out these builders in the Columbia and Lexington areas as they have several new properties going up currently in the best school districts:
Mungo Homes: https://www.mungo.com/why-buy-new
And as always, call your agent with any questions you may have throughout the process of building and buying insurance for new homes.