January 28, 2025
New Construction vs. Older Homes: How Insurance Coverage Differs
When purchasing a home, whether it’s a brand-new construction or a historic property, one crucial factor to consider is home insurance coverage. Insurance policies vary depending on the age, structure, and condition of the home, which can impact your premiums and coverage options. In this blog, we’ll explore the key differences between insurance for new builds and older homes so you can make an informed decision.
Insurance Costs: New Homes vs. Older Homes
One of the biggest questions homebuyers ask is: Do new homes have lower insurance rates? The answer is often yes. Here’s why:
New Construction Home Insurance Benefits:
- Lower risk – New homes are built with the latest safety codes, reducing the chances of structural failures, fires, and plumbing issues.
- Modern materials – New builds often have updated wiring, roofing, and plumbing, minimizing the likelihood of costly repairs.
- Discounts on home insurance – Many insurance companies offer lower premiums for newly built homes because they pose less risk.
Older Home Insurance Coverage Considerations:
- Aging materials and systems – Older homes often have outdated electrical wiring, plumbing, and roofing, which can increase the risk of fires and leaks.
- Higher replacement costs – If your home has custom woodwork or historic features, repairs can be more expensive, leading to higher insurance premiums.
- Potential policy restrictions – Some insurance providers may require additional inspections or exclude coverage for outdated systems.
Home Insurance Policy Differences
When comparing homeowners insurance for new construction vs. older homes, it’s essential to understand how policies differ:
1. Replacement Cost vs. Actual Cash Value
- New Homes: Policies typically cover replacement cost, meaning your home will be rebuilt with similar materials at today’s prices.
- Older Homes: Some insurers may offer actual cash value coverage, which factors in depreciation, leaving you with less coverage.
2. Renovation & Remodel Considerations
- If you’re renovating an older home, your insurance rates may increase if you upgrade electrical or plumbing systems.
- Adding a new roof or modern safety features could qualify you for home insurance discounts.
3. Special Coverage for Historic Homes
- If your home is classified as historic, you may need a specialized policy that covers custom restoration costs.
- Best insurance for historic homes often includes higher coverage limits due to unique building materials.
How to Choose the Right Home Insurance Policy
Here are some tips for securing the best home insurance policy based on your home’s age:
- For new construction homes: Look for bundled discounts (home & auto insurance) and ask about builder’s warranties and how they impact your coverage.
- For older homes: Consider adding ordinance or law coverage, which covers the cost of bringing your home up to modern building codes. Request a 4-point inspection (electrical, plumbing, HVAC, and roof) to avoid coverage denials.
Final Thoughts: Is It Cheaper to Insure a New or Old Home?
Generally, new construction home insurance is more affordable due to lower risk and modern materials, while older home insurance coverage tends to be higher due to aging systems and costly repairs. However, with the right homeowners insurance policy, you can find affordable insurance for both new and historic homes.
Need help finding the right coverage? Contact Secured Insurance Group today for a personalized quote!
