The limit of liability for a dwelling under construction is based on what?

The limit of liability for a dwelling under construction is determined by a percentage of the value of the partially completed home. This method takes into account that a house under construction is not yet at its full market value. By using a percentage of the value, insurers can better assess the risk associated with the partially completed structure and provide appropriate coverage for potential losses that might occur during the construction phase. This approach ensures that the coverage remains relevant to the current state of the home, reflecting its incomplete condition and the associated risks.

In contrast, determining coverage based solely on the value of a completed home would not accurately represent the risk and investment at that stage of construction. Other methods, such as market rates for similar homes or a fixed value based on the policy, may not account for the specific circumstances of ongoing construction and the inherent risks involved during this transitional period.