The Homeowners Insurance Advantage: Why New Construction Wins
How New Construction Homes Offer Lower Insurance Costs, Easier Coverage, and Long-Term Savings Compared to Used Homes
When buying a home, most buyers focus on location, price, and layout—but one factor that’s often overlooked is homeowners insurance. The type of home you purchase—new construction versus an older resale—can significantly impact your insurance rates, coverage, and ease of obtaining a policy.
We spoke with Kelli Vandergeest, a third-generation insurance professional and experienced broker with over 20 years in the industry, to get expert insights on why new construction homes often have the upper hand when it comes to insurance.
Lower Insurance Premiums
Insurance companies assess risk when determining premiums, and newer construction homes present less risk. Used homes often have outdated electrical systems, plumbing, or roofing, making them more susceptible to damage and increasing the likelihood of a claim. With new construction, everything is built to the latest safety and building codes, reducing the risk of loss—and resulting in lower insurance premiums.
Additionally, according to Realtor.com, used homes may have features that drive up insurance costs, such as lead or galvanized pipes, which are more prone to leaks or cracks. These aging systems can contribute to higher premiums compared to the modern, more resilient materials used in new homes.
Faster and Easier Approval Process
Buying homeowners insurance for a used home can involve extensive inspections, documentation of previous claims, and even repairs before a policy is approved. New construction homes, on the other hand, typically require less paperwork and fewer inspections, allowing buyers to secure coverage quickly—sometimes even the same day.
Automatic Discounts and Incentives
Many insurance providers automatically apply credits and discounts to policies for new construction homes. These discounts are designed to reflect the lower risk associated with modern materials, stronger construction standards, and up-to-date safety features. Used homes may still qualify for discounts, but often require upgrades such as hurricane shutters or impact-resistant windows to earn them.
New construction homes also tend to be more energy-efficient, which can lead to long-term savings beyond insurance. According to Realtor.com, newer homes are often built with higher efficiency standards, reducing heating and cooling costs over time.
No Previous Claims to Affect Your Rates
For used homes, the claims history of the property—not just the buyer—can impact insurance rates. If a previous owner filed claims for damage within the last five years, it could result in higher premiums for the new owner. New construction homes come with a clean slate, eliminating any potential rate increases due to past claims.
Better Protection Against Natural Disasters
Natural disasters like hurricanes and storms are a growing concern for homeowners. New construction homes are built to the latest hurricane and disaster-resistant standards, making them less likely to suffer major damage. Because of this, insurers prefer new homes, leading to more competitive rates and stable premiums over time.
Additionally, many builders design homes to withstand regional climate challenges. Homes built in hurricane-prone areas, for instance, must meet stringent wind-resistant codes, reducing the likelihood of major storm damage. This not only gives homeowners peace of mind but also helps keep insurance rates from rising due to storm-related risks.
What Buyers Should Ask About Insurance
Kelli Vandergeest advises homebuyers to work with an insurance agent who is upfront, honest, and willing to walk them through different coverage options. She recommends asking:
- What discounts are available for new construction homes?
- How do coverage options differ between new construction and used homes?
- Are there additional steps I can take to further reduce my insurance costs?