We're having our house built in Ottawa Canada, the days before and after they close up the walls with drywall, it started raining heavily for days. We went to see the house this weekend and the floor has traces of water stain near the walls (but it's dry right now). We are suspecting the insulating material are wet since the vinlyl on the exterior of the house have not been put on. Would that be a problem later on? We have brought up the issue with the builder but they told us we should not worry since there is a plastic between the insulation and the wall so mold will not develop. But what about the wet insulation? We do not know much about construction so any knowledge you can provide will be greatly appreciated. thanks.

You might want to have a home inspector go over the house. Both in the current stage and several steps as it is completed.

You will want to get one that does new home inpsection, not just old homes. They are reqly much different inspections.

As to your question.

First (and hopefully) the stain might be from much earlier in the construction.

But vinyl siding is NOT WATERPROOF. There should be a weather barrier on the house. That can be either house wrap or felt paper (tar paper). Along with proper flashing of the doors and windows.

All of that should be done before insulation and DW.

While the plastic might keep the water off the drywall. It does not keep it out of the insulation, studs, sheathing and bottom plates.

And infact the plastic helps keep the wall from drying out. Thus you can have mold and rot in the wall and not know about it until VERY SERIOUS DAMAGE IS DONE.