Home insurance, once little more than an afterthought for buyers in new construction communities, has become an issue that can upend deals, sometimes at the worst time – as they approach closing.

What’s causing the insurance challenge? Inflationary pressures and the increasing frequency and severity of natural disasters have forced many home insurers to pull back from some markets and raise premium rates significantly. 

According to research by First Street Foundation, nearly 45 million U.S. properties now face elevated risk from at least one climate hazard—such as windstorms, flooding, and wildfires—up from 39 million in 2022. And so far this decade, each year there have been an average of 23 disasters causing more than $1billion each, resulting in combined damages of well over $100 billion.

It’s not surprising then that average homeowners insurance premiums increased by 36% from 2020 to 2023, with much higher spikes in states like California, Texas and Florida due to elevated risks of windstorms and wildfires. In some places, insurance premiums have even eclipsed property taxes as the second highest housing cost behind a mortgage.

Despite this daunting environment, builders can take advantage of short- and long-term solutions to these challenges by teaming up with an insurance expert like Westwood Insurance Agency.

Keeping current communities and sales on track

Working with an insurance agency that specializes in insuring new construction homes provides immediate benefits for builders and their buyers in communities that are already in or nearing the construction phase. Most importantly, this relationship removes the uncertainty around home insurance for both the builder and buyer.

For decades, Westwood has worked alongside builders to create a process that not only enhances the homebuying experience but also supports the builder’s success. Through Westwood, homebuyers have access to top national insurance companies, who provide competitive pricing without sacrificing coverage. As a result, builders know their buyers are in good hands, which strengthens their reputation and helps them stand out in a crowded market. 

One of the biggest advantages of this relationship is seamless integration. Westwood works directly with builders to embed insurance early in the homebuying process—a competitive coverage quote is available right after contract signing—making it simple and stress-free for their buyers.  

Solving the insurance challenge up front

In today’s challenging market, it makes more sense than ever to focus buyers on insurance early in the contract process. With home prices and mortgage rates stretching buyers’ budgets, there is no room for surprises to their total monthly payment. Buyers are increasingly receptive to the insurance discussion, with Zillow’s 2024 Consumer Housing Trends Report showing that 72% of buyers now ask about insurance costs before closing—a 40% increase from 2021.

Through Westwood, instead of buyers scrambling to find coverage at the last minute or possibly ending up with inadequate protection, they get access to policies designed for their new construction home. The community is pre-underwritten, with information about the type of construction and other details already available to the insurance companies that work with Westwood.  

And even though closing may be several months away, coverage can be secured early, and the approximate premium cost is known. The proven results for builders taking advantage of this approach include fewer closing delays, a smoother experience, and peace of mind for the buyer. 

Strategies for ensuring builders’ long-term success

Working with Westwood to help homebuyers secure insurance for their newly built home in new construction communities helps builders establish a more sustainable business for the future.

With rising concerns about insurance costs and availability, builders need to consider the risk profile of potential building sites for their future communities. Westwood leverages the latest data and technology tools offered by insurance companies to assess regions and properties for various hazards early in the development timeline to ensure projects on the drawing board are marketable and insurable for years to come.

Building more resilient homes

While site selection is important, building homes that are more resilient to key hazards is a sound strategy for enhancing buyer confidence and ensuring insurance availability and affordability. Westwood can recommend strategies that may reduce or even prevent damage, including impact-rated roofing, fire-resistant siding, and elevated mechanical systems.

When builders tackle the insurance challenge head-on and work with an insurance expert like Westwood, they can enhance their reputation with buyers, helping ensure the success of their business well into the future.

To learn more, read The New Reality of Home Insurance: Readiness, Resilience, and the Power of Trust, and visit https://westwoodinsurance.com/partners/builders/.