Best Specialty Insurance for Vacant Properties?

5 Replies

My husband and I have purchased our first investment property and have no idea what we're doing. I've been trying to research insurance companies for property insurance only to be told that they cannot insure us because the property will be vacant. We are demoing at our own pace because we're doing it on our own, but I really need the property insured before we have crews move in to do renovations. Does anyone have any recommendations for companies that provide this kind of specialty insurance and what kind of coverage I should be seeking for the dwelling, personal liability and medical payments in the event that someone is injured while working on the property. 

Good question. I'm in process of developing a small lot as well. If you own your primary residence, I believe that you can expand your existing homeowners policy or umbrella policy to cover your vacant lot.  A construction loan will require insurance, if you aren't financing the construction, your local credit union or bank can still tell you what they would require. 

Cynthia,
I just put out this post to someone else's question and it applies to your situation also:

I insure a lot of people in your situation. There are a couple of products we use to handle the insurance. The main one is a Renovation Builders Risk policy. It insures the existing structure and the work being put into the property. The other option is a Vacant Dwelling policy that allows for renovation.

Once you have your Cert of Occupancy (CO) you can cancel the policy and write a new policy based on the new situation (ie. Renting it out)

If you can not find a local broker that can handle it PM me and I will see if I can find agents for you.

@Cynthia Heaton I agree with @John Mocker - there are a lot of insurance agents who offer builders risk and insure vacant properties. You may just have to keep looking. 

On all our SFRs the policy states they are insured as long as the unit isn't vacant for more than 90 days. Read the fine print and find an investor friendly insurance agent/broker. 

Builders risk is not that unique of a policy so it should be relatively available. 

Best of luck!

I'm sorry you're having difficulty with your insurance company; however, when it comes to real estate investors, not all insurance is created equal. 

For a structure that currently exists and you are rehabbing the property, I'd recommend getting a vacant policy that has a builder's risk endorsement. This covers the existing structure and the updates that are currently being completed. 

If it is a new construction build, I'd recommend getting a builder's risk policy. 

Both of these are easy to write and issue from the insurance companies side, it is just a matter of finding an insurance company that is appreciative of the real estate investing community. 

I have had a lot of success with Liberty Mutual on builders risk policies. 

For vacant policies that are also under construction, my favorite companies are (in no particular order) Tower Hill, Vacant Express, Hanover, Markel, and Berkshire Hathaway Homestate. 

When you are getting a vacant policy, the most important items that you make sure of are as follows: 

  • Is this an actual cash value or replacement cost policy? 
  • Is vandalism and malicious mischief covered? (Spray painting, breaking windows)
  • Is theft covered? (stealing copper, hvac, etc.)
  • What is the minimum earned premium? 

Thanks, all! Seems I've been headed down the right path. We've been learning a lot about our standard shopping practices and how we have to change all of our ways to be sure they are "investor friendly." Still a lot of learning to go!