Say you just purchased a plot of land. Land is expensive, and you want to make sure your new land is protected in case something happens before or while your home is being built.
If you purchase land, you can typically extend your home insurance policy to cover that land. This coverage is typically called land insurance, which covers liability concerning bodily injury, property damage and possible lawsuits. If you don’t have a home and instead purchase the land to build your dream home on, you can purchase vacant land insurance separately. This generally covers liability insurance, as well. You can purchase land insurance and home insurance through an independent insurance agency.
Is Land Insurance Required?
You may not be required to carry land insurance for the bare land you own, though it is recommended. A lender is also within their rights to require you to carry insurance for the purchased land. If there is a structure on the land, you should purchase insurance to protect it from fire, wind, theft, vandalism, smoke and other dangers. Keep in mind that you could be held liable if something occurs on your land. For example, if a fire starts on the land and ends up damaging a nearby home, you could be held liable for the damages.
If you have a home, your homeowners insurance should be adequate to cover your plot of land. A typical home insurance policy covers:
- General Liability: Liability insurance covers bodily injury or property damage that occurs on your property, as well as lawsuits relating to either of these incidents.
- Dwelling Coverage: This covers the physical dwelling and its structures from fire, smoke, lightning, wind, hail, theft, vandalism and more.
- Additional Living Expenses: Additional living expenses, or ALE, provide compensation if you must live somewhere else while repairs are being made to the dwelling.
You can purchase home insurance as soon as you sign on a new home. It’s almost never too early to insure your house and the land you’ve purchased. If you’ve purchased land for farming use, be sure to purchase farm insurance. Farm insurance offers coverage specific to farms such as crop insurance, farm equipment insurance and livestock insurance. Consider the use of your land before shopping for insurance to insure your bare land. Liability insurance will not cover damage done to the land itself.
