Insurance During Additional Dwelling Unit Construction

Guide Update 26-25

: Insurance During Additional Dwelling Unit Construction

Effective: 09/14/26

Associated Documents:

Summary of Changes:

Primary Audience: Underwriting and Insurance

HIGHLIGHTS
Effective for Portfolio Mortgage Loans as of September 14, 2026, added new insurance requirements when constructing Additional Dwelling Units (ADU).

Primary Changes

Updated Part II, Chapter 5: Property and Liability Insurance, adding Section 506: Insurance During Additional Dwelling Unit Construction requiring:
- compliant property insurance beginning on the Construction Activity Start Date and ending on Construction Activity Completion Date;
- a transition, with no lapse in coverage, to insurance complying with Part II, Chapter 5: Property and Liability Insurance after the Construction Activity Completion Date;
- builders risk insurance, when needed;
- commercial general liability insurance;
- commercial auto liability insurance for vehicles used in connection with the Construction Activity;
- professional liability insurance for
  - architects,
  - engineers, and
  - other licensed design professionals; and
- flood insurance compliance during construction.
Added Glossary Terms for
- Additional Dwelling Unit,
- Construction Activity,
- Construction Activity Completion Date, and
- Construction Activity Start Date.

Questions

Please contact [email protected] with any questions.