Across Manhasset and the North Shore, it’s hard not to notice the construction activity.
Homes are being thoughtfully renovated, expanded, or completely rebuilt. Whether you’re updating a kitchen, adding a second floor, or knocking down a house to build your dream home, construction brings excitement—and significant financial risk that many homeowners underestimate.
As a local resident and a producer at EPIC Insurance Brokers & Consultants working extensively with high‑net‑worth homeowners, I’ve seen firsthand how insurance can either protect a project or create serious problems, depending on how it’s handled before the first hammer swings.
Why a Builder’s Risk Policy Is Essential
When construction begins, a standard homeowner’s insurance policy is not designed to fully protect a property in transition.
A builder’s risk policy is specifically intended to cover the structure while it’s under renovation or being built from the ground up. It can provide coverage for:
- Fire
- Theft of building materials
- Vandalism
- Wind or storm damage
- Certain types of water damage
Without this coverage, a homeowner may discover too late that a major loss during construction falls into a gray area or is excluded altogether.
A Real World Example
A local homeowner undertook a substantial renovation while living elsewhere. Before the home was finished, a fire broke out overnight caused by temporary wiring. The existing homeowner’s policy limited coverage because the property was deemed “under construction and unoccupied.” The builder’s insurance was also insufficient.
The result? Significant out-of-pocket costs and lengthy coverage disputes that could have been avoided with a properly placed builder’s risk policy.
Why You Must Notify Your Insurer Before Work Begins
One of the most common and costly mistakes homeowners make is failing to notify their insurance carrier when renovations begin. Many insurers consider major renovations a material change in risk. This includes:
- Structural changes
- Roof removal
- Electrical or plumbing upgrades
- Projects exceeding a certain dollar threshold
If your carrier is not informed and a loss occurs, coverage may be reduced or denied entirely.
A Real World Example
A homeowner experienced severe water loss after a contractor accidentally punctured a pipe during a renovation. Because the insurer was not notified of the construction, parts of the claim were contested, delaying repairs and reimbursement.
A brief conversation with your broker before construction begins can prevent this scenario entirely.
The Critical Importance of Certificates of Insurance
Construction projects almost always involve multiple parties: general contractors, subcontractors, electricians, plumbers, and architects. Each one represents a potential liability exposure.
This is why Certificates of Insurance (COIs) are non‑negotiable.
Homeowners should ensure that:
- Every contractor and subcontractor carries valid general liability and workers’ compensation insurance
- The homeowner is listed as certificate holder
- Coverage limits are appropriate for the size and scope of the project
- Policies are active for the full duration of the work
Without proper COIs, a homeowner could be held financially responsible if:
- A worker is injured on site
- A subcontractor causes damage to a neighboring property
- Faulty workmanship leads to a loss
A Real World Example
A subcontractor caused a fire during welding work on a renovation. He carried inadequate insurance, and no certificate had been properly reviewed. The homeowner’s policy responded, but the claim impacted future insurability and premiums.
Don’t Forget About Liability During and After Construction
Construction increases liability risk well beyond the property itself. Open sites, debris, and equipment pose hazards, especially if neighbors, guests, or delivery personnel enter the property.
Beyond the build phase, your liability exposure doesn’t disappear. In fact, once the project is completed, your home is often worth more than ever before, making proper liability and umbrella coverage essential.
After the Project Is Complete: Replacement Value Matters
Once renovations or a rebuild is finished, insurance should be revisited immediately.
This is when your replacement value is at its highest. Unfortunately, it’s also when some homeowners find they are underinsured because coverage limits were never updated.
Key areas to review:
- Dwelling Coverage: based on proper rebuild cost—not market value
- Contents Coverage: especially if new furnishings and custom finishes were added
- Other Structures: such as pools, cabanas, garages, and sheds
- Loss-of-Use Coverage: should the home become temporarily uninhabitable
- Umbrella Liability: reflecting increased assets and exposure
Trying to save money by underinsuring at this stage often proves far more expensive if there’s a loss.
A Neighbor Helping Neighbors
Renovating or rebuilding a home is one of the largest investments many families will ever make. The right insurance strategy should be part of the planning process, not an afterthought.
As a Manhasset resident working closely with high‑net‑worth homeowners across Long Island, my goal is simple: to help neighbors protect what they’ve worked so hard to build. Whether you’re planning a renovation, midway through construction, or settling into your newly completed home, getting the right guidance from EPIC can make all the difference.
If you have questions about property or liability coverage during or after a renovation, I’m always happy to help.
Theana L. Iordanou, Principal, Northeast Region
theana.iordanou@epicbrokers.com
Discover more insights through EPIC’s perspectives at epicbrokers.com.
