Yes. If you choose to finance your construction project, your lender will require you to secure what is known as "Builders Risk" insurance. If you do not finance your construction project, you are not required to carry Builders Risk insurance. In practice, however, most folks who are building a new home on Kiawah opt to carry Builders Risk insurance, even if they are not financing, as it’s the prudent thing to do in the same way people who have paid off their mortgage still carry homeowners insurance.

Builders Risk insurance offers protection to the owner, not to the builder as the name may suggest, for damage to the property suffered during the construction period. It may be helpful to think about Builders Risk as "homeowners insurance while you build". Builders Risk Insurance would offer coverage for example, if your home incurred damage related to a storm, which your builder wouldn’t be responsible for, when you are half-way or three-quarters of the way through the construction of the home.

Specific coverage varies from policy to policy, but covered perils usually include damage from fire, wind, hail, lightning, theft of building materials on the site, vandalism etc. Some policies include premises liability coverage and others don’t but premises liability coverage can easily be secured separately if it’s not included in the Builders Risk policy.

If you finance the construction of your new home, your lender will also require you to carry flood coverage during construction. In most cases, your flood policy will be written with a different insurance carrier than your Builders Risk policy.

Most Builders Risk Insurance carriers will require you to pay the first year’s premium at the start of coverage. Almost all policies will renew for the second year, if the home isn’t finished at the end of the first year, and allow the homeowner to cancel the policy at whatever point construction is completed with a pro-rated refund.

The day the Certificate of Occupancy is issued by Charleston County is the day you will cancel your builders risk policy and begin your traditional homeowner’s insurance coverage. You will want to begin working with your insurance agent well before the issuance of the Certificate of Occupancy on your traditional homeowners insurance.

Be sure to utilize the services of an insurance agency that deals with coastal insurance on a regular basis as they will have the expertise and experience necessary to properly design your Builders Risk coverage. An agency specializing in coastal insurance will also have access to the most competitive Builders Risk insurance markets.