Hi everyone -
I'm wondering if there's an insurance professional (or seasoned real estate investor) in this forum who can provide some guidance on this topic: what is the type of business insurance required for wholesaling and wholetailing real estate?
General liability is a must. But what about property coverage? Builder's risk? Does a Business Owners Policy offer sufficient coverage? The prospect of getting a new property coverage bound for every contract signed is daunting and a builder's risk policy seems overkill on the small (new paint, garbage toss) type projects.
(I'm asking for all my New Jersey brethren)
Depending on your scale a monthly reporting form property policy with the vacancy clause removed is ideal, include GL for each property on that.
But to get that type policy, you need to be in the average 50 units owned at anyone time.
Otherwise your stuck in the call your agent every time you add a property.
Thanks Derek. I see you're from Florida. Are you aware of how your recommendation might need to change for NJ?
Nope. But I just gave generic advice.
Pricing and which insurers will change a lot between Jersey and Florida, but coverage needs don’t.
You still need cover if a Sandy heads your way, and we need cover if it freezes (not likely, but devastating if it did).
No matter what, make sure it’s a “special form” policy. That would be known to any insurance expert reading “vacancy clause removed” but given 80% of insurance agents should not be in the business, I should not assume.
Special form includes theft. Your most frequent claim will always be theft (copper, HVAC, etc) as a wholesaler. Special also picks up water damage and weight of ice and snow, which would be more important there vs here.
@John M. I'll send you a program most of my clients use in these circumstances. It can handle properties on a case by case basis.
@John M. Hit me up Monday and I’ll connect you to our jersey insurer. He will take your call.
Interested to learn more on this subject. I am struggling to understand how you would need insurance beyond liability insurance when wholesaling. You will only have possession of the property for 24 hours, at the most (assuming you are even doing a double-close and not assignment of a contract) as a wholesaler. Is it really necessary to have theft insurance or otherwise to protect against weather/theft/etc for that short amount of time?
Are you technically responsible for the property once it is under contract? I am still somewhat new to all of this and looking to learn... this just seems confusing.
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