New Construction Home Insurance in Texas: Builder's Risk & Beyond
Building or buying a new construction home in Central Texas? Congratulations! New homes come with significant insurance advantages—from lower premiums to better coverage options. But the insurance process is different than buying an existing home, and getting it wrong can leave you unprotected during the most vulnerable stages of construction.
At Texian Insurance, we've insured hundreds of new construction projects across Bell, McLennan, and Lampasas counties. This guide covers everything you need to know: builder's risk insurance, when to switch to homeowners coverage, new home discounts, and local builder recommendations in the Belton, Temple, and Waco areas.
Builder's Risk vs Homeowners Insurance: What's the Difference?
Many people assume their homeowners insurance covers the construction phase. It doesn't. You need builder's risk insurance during construction, then switch to homeowners insurance once the home is complete and you take occupancy.
Builder's Risk Insurance
Temporary coverage during the construction phase
Coverage Period:
From groundbreaking to completion (typically 6-18 months)
Who Buys It:
Builder OR homeowner (depends on contract)
What It Covers:
- ✓ Fire, lightning, wind, hail damage
- ✓ Theft of materials
- ✓ Vandalism
- ✓ Collapse during construction
- ✓ Water damage (if structure is enclosed)
Typical Cost:
1-4% of construction cost (one-time premium)
Example: $300,000 build = $3,000-$12,000
Important: Builder's risk does NOT cover liability if someone gets injured on the construction site. Builders need separate general liability coverage.
Homeowners Insurance
Permanent coverage after construction is complete
Coverage Period:
From move-in date forward (annual policy)
Who Buys It:
Homeowner (required by mortgage lender)
What It Covers:
- ✓ Dwelling (structure)
- ✓ Personal property
- ✓ Liability
- ✓ Medical payments
- ✓ Additional living expenses (if home is uninhabitable)
Typical Cost:
$2,000-$3,500/year (Central Texas average)
Lower for new construction (see discounts below)
Pro Tip: Get homeowners quotes BEFORE closing so coverage starts the day you take possession. Don't wait until after you move in.
Who Pays for Builder's Risk?
This varies by contract type:
Spec Homes (Builder-owned during construction):
Builder maintains builder's risk until you close. You start homeowners insurance at closing.
Custom Builds (You own land during construction):
YOU typically need builder's risk (cost may be rolled into construction loan). Verify with your builder and lender.
When Does Homeowners Insurance Coverage Start?
Timing is critical. Here's the exact transition timeline from builder's risk to homeowners insurance:
During Construction
Builder's risk insurance is active. If you're building custom, you should have a policy in place from day one of construction.
Action Item: 30-45 days before completion, start getting homeowners insurance quotes.
Certificate of Occupancy Issued
City/county building department inspects and approves the home for occupancy. This is the trigger point for insurance transition.
Action Item: Finalize your homeowners policy and set the effective date to match your closing date.
Closing Day / Move-In
Your homeowners insurance MUST be active the moment you take ownership. Lenders require proof of insurance to fund the loan.
Critical Timing:
- • Builder's risk expires at closing (or shortly after)
- • Homeowners insurance starts at 12:01 AM on closing day
- • No gap in coverage
First 30 Days After Move-In
Review your policy and take action on any discounts or improvements you discussed during quoting.
Action Items: Install security system (if planned), document home condition with photos, verify smoke detectors are installed.
Texian Insurance Tip: We coordinate with your lender and closing attorney to ensure seamless coverage transition. Call us at (254) 939-7000 as soon as you have a construction timeline or closing date scheduled.
New Home Insurance Discounts: Save 15-35% on Premiums
New construction homes qualify for substantial insurance discounts that older homes can't get. Here's exactly what you can save and how to maximize these discounts in Central Texas.
New Home Discount
Homes 0-5 years old with no prior claims
10-15%
savings
Newer homes have modern electrical, plumbing, HVAC, and roofing systems that are less likely to fail and cause claims.
Annual Savings: $250-$450 on a $3,000/year policy
Impact-Resistant Roof Discount
Class 4 impact-resistant shingles (UL 2218)
10-20%
savings
Critical in hail-prone Central Texas. Most new builders offer Class 4 shingles as standard or upgrade option. Brands include GAF Timberline HDZ, Owens Corning Duration Flex.
Annual Savings: $300-$600 on wind/hail premium
Ask your builder to include this in your contract—it pays for itself in 3-5 years.
New Roof Discount
Roofs 0-3 years old
5-10%
savings
Applies even without impact-resistant shingles. Roof age is the #1 underwriting factor in Texas.
Important: Save your roofing invoice and any manufacturer certifications—you'll need them for your insurance application.
Advanced Security System
Monitored alarm, smart locks, cameras
5-15%
savings
Many new construction homes include pre-wired security. Adding monitoring ($30-$50/month) can save $150-$400/year on insurance.
Qualifying Systems: ADT, Vivint, Ring Alarm Pro, SimpliSafe (with monitoring)
Fire-Resistant Construction
Brick/masonry exterior, fire-rated materials
5-10%
savings
Full or partial brick homes get better rates than wood frame/siding. Modern building codes also include fire-rated drywall and materials.
Smart Home Features
Water leak detectors, smart thermostats, etc.
2-5%
savings
Devices like Flo by Moen, Phyn, or Ring Alarm Flood/Freeze Sensors can prevent expensive water damage claims.
Emerging Discount: Some carriers now offer discounts for whole-home water shutoff systems.
Stack Multiple Discounts = Maximum Savings
New construction homes can qualify for multiple discounts simultaneously:
Example Scenario: New brick home with Class 4 roof, monitored security, and bundled auto policy
Total Savings: $2,275/year (65% off base rate!)
Recommended Local Builders in Central Texas
We've insured new construction projects from dozens of builders across the Belton, Temple, and Waco areas. Here are local builders we recommend based on our experience with quality construction, insurance-friendly features, and customer satisfaction.
Belton / Temple Area
Ashton Woods Homes
Active communities: Morgan's Point, Wildridge
Known for: Energy-efficient builds, modern floor plans
Centex Homes
Active communities: Salado Creek, Willow Springs
Known for: Value pricing, quick build times
Legend Homes (Custom Builder)
Specializes in custom builds on your land, premium finishes, Class 4 roofs standard
Waco / Woodway Area
Highland Homes
Active communities: Sanger Heights, Wildflower
Known for: Smart home packages, modern designs
Magnolia Realty / Construction
Chip & Joanna Gaines' construction arm
Known for: Farmhouse style, quality finishes
Riverstone Homes (Custom Builder)
High-end custom builds, excellent reputation for insurance-friendly construction methods
What to Ask Your Builder About Insurance
- "Do you offer Class 4 impact-resistant shingles as standard or upgrade?"
- "What type of electrical panel will be installed?" (200-amp minimum preferred)
- "Is the home pre-wired for security system?" (saves $500-$1,000 later)
- "Who maintains builder's risk insurance during construction?" (verify coverage)
- "What's the typical construction timeline?" (affects when you need homeowners coverage)
Building or Buying a New Home in Central Texas?
Let Texian Insurance help you navigate builder's risk and homeowners coverage. We'll find you the best rates with all available new home discounts.
New construction specialists since 1997
Frequently Asked Questions
Do I need builder's risk insurance if the builder says they have it?
It depends on your contract. If you own the land during construction (most custom builds), YOU typically need builder's risk. If the builder owns the property until closing (spec homes), their policy covers it. Always verify in writing and check with your lender—they may require you to have your own policy.
How much cheaper is insurance on a new home vs. an older home?
Typically 15-35% cheaper for comparable coverage. A new home with impact-resistant roof, security system, and bundled auto policy might pay $2,000/year vs. $3,200/year for a 15-year-old home with the same coverage limits. The gap widens significantly after age 15-20 years.
Can I get homeowners insurance quotes before the home is finished?
Yes! We actually recommend getting quotes 30-60 days before completion. You'll need basic info: square footage, roof type, construction materials, and estimated completion date. We can give you accurate quotes with preliminary build specs and finalize coverage once construction is complete.
What happens if construction delays push my closing date?
No problem. Homeowners policies can be adjusted for new effective dates before they're issued. If you've already bound coverage and closing gets delayed, we can push back the start date at no penalty. Just let us know as soon as you learn about delays.
Do new homes need flood insurance in Central Texas?
It depends on the property's flood zone. New construction in high-risk flood zones (A or V zones) requires flood insurance if you have a mortgage. Even outside high-risk areas, we recommend considering flood coverage—Central Texas flash floods can happen anywhere. Read our Texas Flood Insurance Guide for details.