Home Insurance for New Construction in Colorado: What to Know Before You Close

In Colorado, homeowners insurance can change your monthly payment more than almost anything except the price and the rate. The builder's team rarely brings it up. Here's what new build buyers need to understand: when to get coverage, what the policy should include, and the questions to ask before you close.

The short answer

Get a real quote early, before you sign or soon after, because insurance is part of your payment. Know your wind and hail deductible in dollars, make sure coverage is based on rebuild cost, not purchase price, ask whether your roof choice earns a discount, and bind the policy 2–4 weeks before closing.

Why Insurance Matters More in Colorado

Hail is the main reason. Colorado Division of Insurance data released in 2026 shows hail makes up as much as 54% of homeowners' premiums in some counties, and about half along the Front Range. Wildfire risk accounts for roughly 1% to 25% of premiums, depending on the county.

Premiums have climbed fast. Colorado's average homeowners premiums more than doubled from 2014 to 2024. For a new build buyer, that means insurance deserves a line in your budget from the start, right next to taxes, HOA dues and any metro district tax.

When to Get Insurance on a New Build

A new build has a longer runway than a resale home. Use it.

1
During construction
The builder's insurance covers the house
While the home is being built, the builder normally carries builder's risk insurance on the structure. It protects the builder, not you, and it ends when construction is finished. Ask the builder to confirm it's in place.
2
Before you sign, or soon after
Get a real quote
Get at least one quote on the plan and lot you're considering, with the roof and options you're choosing. In Colorado, insurance can change your monthly payment more than buyers expect, and your lender counts it when you qualify.
3
At the design center
Ask before you choose your roof and options
Some choices, like a Class 4 impact-resistant roof, can lower your premium with some insurers. Ask your insurance agent what discounts apply before you finalize selections.
4
2–4 weeks before closing
Bind the policy
Your lender will want proof of coverage, with the lender listed on the policy, before closing. The policy should start no later than the day you close, so there's no gap between the builder's coverage and yours.
5
At closing
Pay the first year and set up escrow
Lenders commonly collect the first year's premium at closing and then add insurance to your monthly payment through escrow. Ask your lender how they'll handle it.

What Your Policy Should Include

Two policies with the same premium can protect you very differently. These are the parts to read closely.

Dwelling coverage (replacement cost)

This should be based on what it would cost to rebuild your home today, not the purchase price, which includes the land. Make sure it reflects your upgrades and finishes. Colorado law now requires insurers writing replacement cost policies to give you a replacement cost estimate when you apply and at each renewal.

Wind and hail deductible

Many Colorado policies have a separate wind and hail deductible, often a percentage of your dwelling coverage instead of a flat dollar amount. A 2% deductible on a home insured for $550,000 is $11,000 out of pocket after a hailstorm. Know this number before you buy.

Roof coverage

Read how the policy pays for roof damage. Some policies pay depreciated value on roofs or limit cosmetic hail damage. A brand-new roof is an advantage, so make sure the policy treats it that way.

Extended replacement cost

Pays above your dwelling limit if rebuilding costs more than expected, as many homeowners learned after the 2021 Marshall Fire. Colorado requires insurers to offer extended replacement cost of at least 50% of the dwelling limit.

Building code upgrades (law and ordinance)

Pays for rebuilding to current code after a loss. Colorado requires insurers to offer this at 20% of the dwelling limit.

Water and sewer backup

Usually an add-on, not standard. Worth asking about, especially if your home has a finished basement.

Additional living expenses

Pays for housing while your home is being repaired or rebuilt. After a total loss in a governor-declared wildfire disaster, Colorado requires at least 24 months of this coverage.

Personal property and liability

Covers your belongings and protects you if someone is hurt on your property. Check the limits, especially for higher-value items.

What Homeowners Insurance Usually Doesn't Cover

Flood. Standard policies don't cover it; flood insurance is a separate policy.
Earth movement and settling. Expansive soils are common along the Front Range, and that's generally a builder warranty question, not an insurance one.
Defects in how the home was built. That's what the builder's warranty and your inspections are for.
Normal wear and maintenance.

Your builder's warranty and independent inspections cover what insurance doesn't. See the new construction inspection checklist.

Townhomes, Paired Homes and the HOA's Master Policy

In many townhome and paired-home communities, the HOA carries a master policy on the building exteriors, and you buy a policy for your interior, belongings and liability. What the master policy covers varies a lot, so read it before you choose your own coverage, and check the HOA's deductible, since owners can share it after a claim. What to read in the HOA documents.

Questions to Ask Your Insurance Agent

Bring this list when you get quotes. Compare answers, not just premiums.

What will this home cost to insure per year, with the roof and options I'm choosing?
What is my wind and hail deductible, in dollars, not just a percentage?
How does this policy pay for roof damage, including cosmetic hail damage?
Is the dwelling limit based on a current replacement cost estimate, including my upgrades?
Is extended replacement cost included, and at what percentage?
Does a Class 4 roof or anything else I'm choosing qualify for a discount?
Is water and sewer backup included, or is it an add-on?
For a townhome or paired home: what does the HOA's master policy cover, and what do I need to cover?

Local Insurance Agents I Trust

Independent agents can compare several companies for you, which matters in a market like Colorado's.

Want a quote from an insurance agent who knows new construction? Reach out and I'll introduce you to someone I trust.

Ask for an introduction

Frequently Asked Questions

Why is home insurance so expensive in Colorado?

Mostly hail. Colorado Division of Insurance data from 2026 shows hail makes up as much as 54% of homeowners' premiums in some counties, and about half along the Front Range. Wildfire risk accounts for roughly 1% to 25% depending on the county. Colorado premiums more than doubled from 2014 to 2024.

When should I get homeowners insurance for a new construction home?

Get a quote early, before you sign or soon after, because insurance affects your monthly payment and how much you qualify for. Bind the policy two to four weeks before closing so your lender has proof of coverage, and make sure it starts no later than your closing date.

Who insures a new home while it's being built?

The builder, usually through builder's risk insurance. It covers the structure during construction and ends when the home is finished. Your homeowners policy takes over at closing.

Is insurance cheaper on a new home?

Often, yes. Many insurers price newer homes lower because they have new roofs, systems and wiring built to current code. But location, hail exposure and your deductible matter more than age, so get an actual quote.

Does an impact-resistant roof lower insurance in Colorado?

With many insurers, a Class 4 impact-resistant roof can lower your premium, but the discount varies by company and some won't discount Class 3 shingles. Ask your insurance agent for the actual savings before you choose your roof at the design center.

What is a wind and hail deductible?

A separate deductible for wind and hail claims, often a percentage of your dwelling coverage. At 2% on a home insured for $550,000, you'd pay the first $11,000 of a hail claim.

Should my coverage equal my purchase price?

No. Dwelling coverage should be based on what it would cost to rebuild the home today. The purchase price includes the land, which doesn't need to be rebuilt, but your upgrades and finishes do.

What if I can't find homeowners insurance?

Talk to an independent agent who can shop several companies. Colorado also has a FAIR Plan, an insurer of last resort for homes that have been declined by private insurers. It's limited, mainly fire coverage, so it's usually paired with other coverage.

Insurance is part of your real monthly cost.

I'll help you get insurance, taxes, HOA dues and metro district costs into one real number before you commit to a builder. The builder's agent works for the builder. I work for you.

Talk with Mark What a new build really costs

Mark Leavitt is a Northern Colorado real estate broker with RE/MAX Alliance, not an insurance agent. This page is general education as of November 2026, not insurance advice. Coverage, discounts and rules vary by company and change over time; confirm details with a licensed insurance agent.

Sources: Colorado Politics: hail drives up to 54% of premiums (Division of Insurance data) · KUNC: insurance taking a bigger bite of the budget · Hall & Evans: HB23-1174 underinsurance law · Hall & Evans: HB22-1111 wildfire total loss law · Colorado Division of Real Estate: the FAIR Plan · Colorado Division of Insurance