Do you need to purchase insurance for flips?

Question

I hired an attorney for a house I’m flipping and he asked me if I have insurance for the property. This caught me by surprise, being a first time flipper I wasn’t aware I needed any sort of insurance for a property I only intended on holding for 3 to 6 months  through my LLC. Can anyone shed any light on this and what insurance if any you’ve purchased when flipping houses. Thanks,

E.

Wayne Brooks · Answer

What if vandals break in, cause a major flood or fire? What about liability? One of the workers, not covered by workers comp by one of your illustrious subs, get hurt/disabled while working on your house....who do you think pays?

OF COURSE you need insurance! You’ll want to get a renovation/rehab version of Builders Risk, and liability.

OF COURSE you need insurance!  You’ll want to get a renovation/rehab version of Builders Risk, and liability.

Teri Feeney Styers · Answer

@Ruth Lyons my understanding is that coverage for a vacant property under renovation (not a rental) isn't the same - I would buy the cheaper "landlord" policy it that were the case. You might do some quiet inquiries... You might find that you aren't covered for the types of losses you could incur.

Steve Morris · Answer

Yes and make sure ALL contractors are licensed AND bonded.

Ryan Thomas · Answer

@Emillio Henry

Hey Emilio, I’m a commercial insurance agent. Builders risks can be 3-6 month terms. It’s higher exposure for theft and vandalism too so make sure you have proper security measures in force. My house got robbed during a flip. Make sure the contractor will carry the same GL limits you have ($1M/$2M) and is willing to provide certificates listing you as an AI. Sometimes carriers even require the contractors loss runs so make sure they have those handy at the least. Let me know if you have any questions!

Ryan Thomas · Answer

@David M.

Just to add; If the cost of the flip is mostly cosmetic and under 10% of the purchase price of property than a vacant policy would suffice.

Adam Zdunek · Answer

@Emillio Henry I would urge anyone that has a business/real estate investor to have insurance even if the properties are in your LLC.  You're not only protecting yourself from a liability claim, but you also want to protect your investment from a property claim.  Not sure where your property is located, but any local independent insurance agent should be able to help you out with your property.

Louis Jeffries · Answer

No real need to reply, but it seams that you are not financing this flip if you were of course it would be mandated by the lender. But the risks are great and insurance is critical when flipping homes. Fire, theft, liability, etc, etc, etc

Emillio Henry · Answer

Hey everyone, thank you so much for all the useful information. Sorry I’m just getting back to you all I’ve been insanely busy with this property, so many little things have come up in the last week taking all my focus so I apologize but again thank you so much I’ll be contacting my Local insurance provider ASAP!

Ruth Lyons · Answer

@David M. Thanks for the heads up; I'll look into that!

David M. · Answer

@Ruth Lyons

If you are flipping, have you looked into a vacant home policy?  Its in between a builder's risk and landlord policy.

Do you need to purchase insurance for flips?

Most Popular Reply