Home Insurance for New Construction in Northwest Arkansas: How Builders’ Risk, Warranty, and Homeowners Policies Work Together

Northwest Arkansas is in the middle of a construction boom. Families are building homes in Bentonville, Rogers, Bella Vista, Springdale, and Centerton at record rates. But with this rapid growth comes a persistent confusion point: 

“If I’m building a home, when does my insurance coverage actually begin — and which policy covers what?”

Most homeowners believe that the builder’s insurance covers everything. It doesn’t. Others think their homeowners policy activates automatically at closing.
It doesn’t, unless it’s set up correctly.

As an independent insurance agency serving all of Northwest Arkansas, OZK Insurance sees a huge range of issues during the construction-to-occupancy phase. And some can be devastating financially if not handled properly.

This comprehensive guide explains exactly how:

• Builders’ Risk Insurance
• General Liability (your builder’s policy)
• Home Warranty
• Your Homeowners Insurance (HO‑3 / HO‑5)
  
  work together to protect your investment.

Part 1: The 3 Phases of Insuring a New Home Build in NWA

Every new home in Arkansas passes through three financial protection phases:

Phase 1 — During Construction: Builders’ Risk + Builder’s Liability

Phase 2 — At Closing: Your Homeowners Insurance activates

Phase 3 — After Move-In: Home Warranty + HO Coverage continue

Understanding the handoff between these phases is crucial — because coverage gaps during construction are the #1 risk for new homebuyers in Arkansas.

Part 2: What Builders’ Risk Actually Covers (And What It Doesn’t)

Builders’ Risk is a specialized coverage that protects a home while it’s under construction. Many NWA homebuyers are surprised to learn:

✔ It can be purchased by the builder OR the future homeowner
✔ Lenders often require proof of Builders’ Risk before construction begins
✔ It covers the structure but not everything on the site

Builders’ Risk covers:

• Fire
• Theft of building materials
• Vandalism
• Hail or wind damage
• Lightning
• Certain water damage events
• Collapse from construction-related causes

Common examples in Northwest Arkansas:

1. Lumber Theft in Bentonville
With dozens of subdivisions framing simultaneously, materials sitting on job sites are prime theft targets.

2. Severe Windstorm in Springdale
A partially built home loses roof decking due to high winds. Builders’ Risk steps in.

3. Fire During Construction in Rogers
Electrical work sparks a blaze before insulation/drywall is installed.

Part 3: Builder’s General Liability – Important but Misunderstood

Your builder’s general liability policy is designed to cover situations where the builder is at fault, such as:

• Faulty workmanship
• Negligence leading to property damage
• Bodily injury to someone else on the job site

But here’s the catch:

If the damage isn’t clearly the builder’s fault, their liability policy may not pay.

Example:
A windstorm blows over part of the frame. That’s weather — not negligence.
Builders’ Risk would apply, not the builder’s liability.

That’s why both policies must exist and must be clearly understood.

Part 4: When Your Homeowners Insurance Takes Over (The “Closing Day Switch”)

A new construction homeowner policy (typically HO‑3 or HO‑5) must take effect the moment you take possession of the property, not:

• When you move in
• When utilities are turned on
• When the builder finishes final touches

Lenders in Arkansas require a homeowners policy before the closing is finalized.
This coverage protects:

• The completed structure
• Your personal property
• Additional living expenses
• Liability
• Medical payments
• Detached structures

What most homeowners don’t know:

If closing gets delayed
→ your insurance must be adjusted.

If you move in before closing
→ your coverage must be updated immediately.

If the builder leaves equipment/tools in the home
→ coverage must be coordinated between policies.

  Closing dates shift frequently in new construction. One missed adjustment can leave you uninsured for thousands of dollars in risk.OZK Insurance coordinates timing directly with your lender and builder to ensure zero gaps.

Part 5: The Overlooked Role of Home Warranty Programs

Most new builds come with a 1-year workmanship warranty and 2–10-year structural warranty, depending on the builder.

Home Warranty covers:

• HVAC
• Appliances
• Certain electrical or plumbing issues
• Workmanship defects (builder-specific)

But it does NOT cover:

• Storm damage
• Fire
• Flooding
• Theft
• Personal property
• Additional living expenses

Warranties and homeowners insurance work together, both are necessary.

Part 6: Real Local Examples of Coverage Gaps We’ve Prevented

Example 1: Rogers Home – $22,500 Water Damage

A pipe burst before closing. The builder said it wasn’t negligence, and refused to file liability.
Because the homeowners policy wasn’t active yet, they were uncovered.

OZK Insurance stepped in and helped negotiate Builders’ Risk coverage.

Example 2: Bella Vista Home — Materials Theft

Thieves stole appliances during the week before closing. The homeowners’ policy was already active → Fully covered.

Had they waited until move-in day, they would have paid out-of-pocket.

Example 3: Bentonville Custom Build — Storm Damage Before Closing

Wind ripped off underlayment and damaged interior framing.
Because the builder carried proper Builders’ Risk, the homeowner didn’t pay a dime.

This is why reviewing construction contracts matters.

Part 7: What Coverage You Need During Construction

Here is the correct order of coverage for most new NWA home builds:

Phase 1 — During Construction

You need:

• Builders’ Risk (if builder doesn’t carry it)
• Builder’s Liability (builder must carry)
• Optional: Materials or equipment coverage
• Optional: General liability for homeowner acting as GC

Phase 2 — At Closing

You need:

• Homeowners policy (Coverage A based on rebuild cost)
• Personal property coverage
• Loss of use coverage
• Liability
• Medical payments

Phase 3 — After Move-In

You need:

• Home warranty (included usually)
• Optional: Service line coverage
• Optional: Equipment breakdown coverage
• Optional: Umbrella policy
• Optional: Flood insurance (very wise in NWA)

Part 8: How OZK Insurance Helps New Homeowners Avoid Mistakes

Most issues come from bad assumptions:

Assuming the builder’s insurance covers everything
Assuming homeowners insurance starts automatically
Assuming the lender handles the details
Assuming a warranty replaces insurance
Assuming all policies cost the same
Assuming “cheap” equals good

OZK Insurance fixes this by:

• Reviewing your construction contract
• Confirming whether the builder carries adequate Builders’ Risk
• Coordinating start dates
• Working with your lender
• Setting accurate Coverage A based on NWA rebuild costs
• Explaining every coverage clearly
• Comparing multiple carriers to find best value

This is where independent agencies outperform direct carriers — by a wide margin.

FAQ: Common Questions from New Construction Buyers in NWA

“Does my builder automatically carry Builders’ Risk?”

Not always — many NWA builders only carry general liability.

“Should I insure the home before closing?”

Yes, your policy typically starts on closing day, but if you place appliances early or close is delayed, coverage must adjust.

“Do I need flood insurance for new construction?”

New neighborhoods often have changing drainage — flood insurance is wise even outside high-risk FEMA zones.

“What happens if something is damaged after construction but before move-in?”

It depends on who has possession and which policies are active — which is why timing matters.