Insurance for Residential Construction

Residential construction insurance is more expensive primarily because of construction defect litigation exposure. Homeowners and HOAs actively pursue defect claims, particularly for water intrusion and structural issues, and many states have consumer protection statutes that make it easier for homeowners to bring these claims. The long statutes of repose in residential construction, often extending eight to twelve years, mean that carriers must reserve for potential claims years after policies expire. Class action exposure in production housing amplifies the potential severity. These factors combine to produce higher rates and more restrictive coverage terms in the residential market compared to commercial construction.

Completed operations limits for residential builders should reflect the volume of homes delivered annually and the potential for multi-unit defect claims. A custom homebuilder completing five to ten homes per year may be adequately protected with a two million dollar completed operations aggregate. A production builder delivering fifty or more homes annually should carry higher aggregates, potentially with per-project endorsements to prevent a single development claim from consuming the entire limit. ALKEME analyzes your annual production volume, average home value, and geographic exposure to recommend completed operations limits that provide meaningful protection.

Remodeling and renovation work is typically covered under the same GL policy as new construction, but it introduces additional exposures that must be addressed. Working in occupied homes creates care, custody, and control exposure for the homeowner existing property. Renovations to older homes may involve lead paint disturbance, asbestos-containing materials, and outdated electrical or plumbing systems. These exposures should be discussed with your ALKEME advisor to ensure your policy does not contain exclusions that would leave renovation-specific risks uncovered.