On this page
Before closing on a new home you need a homeowner's policy effective on the closing date, a decision about flood coverage (a separate policy, and FEMA says a new one takes 30 days to start), an understanding of what the builder's warranty covers and what insurance covers, and a plan to photograph every room and every piece of equipment in the first week so the inventory exists before anything happens to it. None of that is hard. All of it is easier before you move in than after.
This post is not insurance advice and does not tell you what to buy; an agent does that, with your policy in front of them. It is about the questions to ask, the deadlines, and the record that makes a claim go well.
What must be in place at closing?
At closing, the lender requires proof of a homeowner's policy effective that day, naming the lender, with coverage on the structure at least equal to what they require and usually what it would cost to rebuild. Line it up two to three weeks ahead: the agent needs the address, the closing date, the construction details (which the builder's spec sheet provides), and the lender's requirements. A policy bound the morning of closing is a bad morning.
Ask the agent three questions before binding: whether the structure coverage is replacement cost and whether it reflects the cost to rebuild as built; what the deductibles are, including any separate wind, hail, or hurricane deductible common in storm regions; and what is excluded, because flood, earthquake, sewer backup, and some water damage often are unless added.
Why is flood insurance separate?
Flood insurance is separate because standard homeowner's policies exclude flood, and the National Flood Insurance Program and private flood insurers write it as its own policy with its own waiting period. FEMA's guidance is direct: most property insurance does not cover flood losses, flood insurance is available separately, and a policy purchased today takes 30 days to go into effect. A house outside a mapped flood zone can still flood, and a new subdivision changes the drainage around it.
FEMA's guide to preparing for a hurricane says most property insurance policies do not cover flood losses, that flood insurance is available for homeowners through the National Flood Insurance Program in participating communities, and that a policy purchased today will take 30 days to go into effect. It also advises reviewing insurance policies and cataloging belongings as part of protecting the property.
Decide about flood coverage before closing, when there is time for the waiting period to run before the first storm season, and ask the agent about sewer and drain backup coverage at the same time; it is a separate, inexpensive addition on many policies and it covers a common new-home loss.
How do the warranty and the insurance divide the risks?
The builder's warranty covers defects in the builder's work for stated windows; insurance covers sudden, accidental losses regardless of cause, minus exclusions. A leaking supply connection the plumber left loose is a warranty item; the ruined flooring under it may be an insurance claim, or may be the builder's to fix as consequential damage, depending on the warranty document. The record of what happened, when it was found, and who was told decides which path pays, which is why the warranty timeline and the claims process matter to the insurance side too.
| Situation | Usually warranty | Usually insurance |
|---|---|---|
| A defect in workmanship found in the first year | Yes | No |
| Storm damage to the roof | No | Yes, subject to the wind or hurricane deductible |
| A pipe that fails because of installation | The pipe: yes | The water damage: often, check both documents |
| Theft, fire, vandalism | No | Yes |
| Settling cracks within the warranty's tolerance | No (within tolerance) | No |
| Flood from outside the house | No | Only with flood insurance |
| Appliance failure | Manufacturer warranty | No, unless a covered event caused it |
What record does an insurer want?
An insurer wants proof of what was in the house and what it cost: a room-by-room inventory with photos, receipts for anything valuable, the equipment list with models and serials, and the policy with its declarations page. On a new house that inventory is easiest in the first week, before the boxes are unpacked and while the receipts are in one pile. It is the same photo walk that starts the home record, and the same closing-day filing described in the documents post.
- Photograph every room from the door and from the corners, then every piece of equipment's label, and every valuable item with its receipt.
- File the policy and the declarations page with the expiry date set to the renewal.
- Enter the equipment with models and serials, and the major purchases with prices, into the inventory.
- Store a copy of all of it somewhere other than the house: the record's cloud copy, an export, or both.
What should you review each year?
Review the policy at each renewal: whether the rebuild cost still matches construction costs, whether you have added a deck, a finished basement, or a fence that raises it, whether the deductibles still make sense, whether the flood decision has changed with the neighborhood's drainage, and whether the inventory has kept up with what you own. The renewal reminder in the record, set from the declarations page's expiry date, is what makes the review happen.
Common questions
Does the builder's warranty replace insurance?
No. The warranty covers defects in the builder's work for set periods; insurance covers sudden losses from events like fire, wind, theft, and some water damage, whoever built the house. A pipe that bursts because it was installed wrong may be a warranty item for the pipe and an insurance claim for the flooded floor. You need both, and the record of what happened decides which pays what.
Do I need flood insurance on a new house?
If the house is in a flood zone your lender will require it; if it is not, it is still your call, and FEMA's guidance is that most property insurance does not cover flood, that flood insurance is a separate policy, and that a new policy takes 30 days to take effect. Decide before closing, not the week a storm is named.
What is the difference between replacement cost and actual cash value?
Replacement cost pays to rebuild or replace at today's prices; actual cash value subtracts depreciation. On a new house the difference is small in year one and grows every year. Ask which your policy uses for the structure and for contents, and ask what it would take to rebuild the house as built, not what you paid for it.
What should you do next?
Call the agent three weeks before closing with the builder's spec sheet in hand and ask the three questions. Then, on move-in day, do the photo walk before the furniture arrives; it takes an hour and it is the inventory.