Selling homes under construction can be a different experience than working in real estate with homes that are older. There is an exhilarating feeling that both the buyer and the seller experience when a home under construction is about to be finished. Then it’s put out on the market. But there are also lots of questions that come with new-home construction business.
New build home insurance needs to be taken out to protect the unfinished home from any unforeseen dangers or threats. But who pays for the insurance: the builder or the buyer? Construction companies need to make clear to their customers who is responsible for what is in the insurance process.
We’ll cover the essentials of building new-home construction businesses. We’ll especially focus on who insures the homes and how to get the best customer service in the business so that your buyers will want to work with you.
Informing Customers About New Build Home Insurance
Forming good habits with your money is one of the most important things any entrepreneur can do. Giving your clients the information they need to trust you as a small business owner is equally important.
Just because a home is still under construction does not mean that it doesn’t need to be insured. That usually falls on the customer in the case of a smaller construction business. If you are a contractor, you are likely building homes for individuals or niche customer bases.
This means the customers have already purchased the house. You are now building the home to their ideals and desires. The property is going to belong to them soon, and they need to protect it. Unfortunately, many customers think that the builder is supposed to take out insurance on an unfinished home, but that is simply not true.
Why would it be up to the building company to insure something that they are creating for a customer? It would be like a car dealership insuring a car that is about to go off the lot in the next few days. You see how that doesn’t make much sense.
New-home construction companies can do the same thing by explaining just how liable their customers are for the property. Then nobody will be confused or upset if any accidents happen down the line. Making your company accountable for the happiness of customers is something that every business owner no matter the niche should care about.
Forgotten Items That Need Insuring on Incomplete Homes
When you are running a new-home construction business, you are usually going to be following the directions and wishes of your clients. This can be a lengthy process. It means there are things that customers need to insure in their incomplete home, and you should always be willing to talk about it with them.
Let your client know that there may be materials such as brick, plaster, and wood that will be laid out while other parts of the home are being finished. If you live in a state that has a lot of high-risk weather, these items could become victims of natural disasters. Somebody will have to pay to replace these materials, and insurance can do that.
They may also be unaware that theft is highly common in unbuilt homes. The exposure of the property makes it a prime target for criminals.
Many people may even move into the new home if most of it is already finished, leaving a single room or portion very clearly open to criminal activity. These thieves will monitor your home and see which rooms are not completed, leaving you feeling very violated if someone intrudes on the unfinished portion.
This may seem a little overwhelming for both the buyer and the construction company, but there is nothing to fret about if everyone is well educated on these topics. In fact, unbuilt homes are cheaper to insure than already-built ones and older homes. This is because everything is new and there is a lower risk of something being damaged on an unbuilt home.
Exceptions to the Rules
All this information will leave many wondering why their contractor doesn’t have to take out insurance on the property they are building. Fortunately, that answer is actually not that complicated. It all depends on who owns the property during the building process.
As a new-home construction contractor, you will definitely need to take out your own insurance coverage on the property if you still own the land you are building on. If the client has bought the land, they are liable for any damages or accidents that occur. They are the ones who need to take out home insurance on the things in the home.
Communication is the key to this process. Even if your client doesn’t ask questions about insurance, inform them of these things before they reach the point of no return. Talk to your customers about who owns what and whether they need to act in accordance with the insurance responsibility rules.
New-home construction is one of the oldest startup ideas in the business world. Contractors are always wanting to start their own construction business if they have an interest in building homes. Still, many don’t realize all of the logistics and burdens that go beyond just hammering in the new siding and putting up the walls.
Take pride in the responsibility of the contractor role and ask for advice from other companies that inspired you to become a builder. Your customers will appreciate it and recommend you to their friends and family if they ever want a house or another building erected.
