Skip to content
Rehabbing & House Flipping

User Stats

958
Posts
274
Votes
Will F.
  • Investor
  • Los Angeles County, CA
274
Votes |
958
Posts

Insurance for flipping

Will F.
  • Investor
  • Los Angeles County, CA
Posted Nov 3 2014, 14:18

What type of insurance do you all recommend for short term real estate holding and construction. Liability, etc? Also how do you generally hold title? LLC?

Our plan is to flip and only hold for 4-6 months.

User Stats

481
Posts
187
Votes
Huy N.
  • Houston, TX
187
Votes |
481
Posts
Huy N.
  • Houston, TX
Replied Nov 3 2014, 14:52

I hold the flip house in an LLC that has no asset. I just do regular fire and storm insurance and pay on every 3 month instead of a year plus vandalism coverage

Anybody have a better way to do this i would love to know as well!

User Stats

2,472
Posts
1,406
Votes
Jason Bott
Pro Member
#2 Insurance Contributor
  • Insurance Agent
  • Nationwide
1,406
Votes |
2,472
Posts
Jason Bott
Pro Member
#2 Insurance Contributor
  • Insurance Agent
  • Nationwide
Replied Nov 3 2014, 14:55

@Will F. 

NREI has the best program for your strategy.  I will send you specific contact info in PM.

Traditional policies require you to purchase a combination of polices depending on the stage the project is in.  Vacant to Rehabbing to rented or back to vacant when finished.  Each of these stages is a separate policy and usually requires a 90 day minimum premium payment.  The NREI policy covers each stage of the process without having to start and stop policies.

Good luck!

BiggerPockets logo
Meet Investor-Friendly Agents
|
BiggerPockets
Network with top investor-friendly agents who can help you find, analyze, and close your next deal.

User Stats

258
Posts
170
Votes
Katie Neason
Pro Member
  • Flipper/Rehabber
  • Bryan, TX
170
Votes |
258
Posts
Katie Neason
Pro Member
  • Flipper/Rehabber
  • Bryan, TX
Replied Nov 3 2014, 17:42

@Jason Bott I would love the contact name as well. Could you PM it to me?  Thanks for asking the question @Will F. 

User Stats

340
Posts
243
Votes
Chris C.
  • Wholesaler
  • Easley, SC
243
Votes |
340
Posts
Chris C.
  • Wholesaler
  • Easley, SC
Replied Nov 4 2014, 04:31

@Jason Bott Pleae send me the insurance info as well.  Thanks

User Stats

16
Posts
6
Votes
Didi Siani
  • Residential Real Estate Agent
  • Fort Lauderdale, FL
6
Votes |
16
Posts
Didi Siani
  • Residential Real Estate Agent
  • Fort Lauderdale, FL
Replied Nov 5 2014, 16:21

@Katie Neason 

I'm a flipper in South Florida doing 70 flips a year.

I need an insurance too.

Please PM me :)

User Stats

253
Posts
36
Votes
Kyle B.
  • Highland, IN
36
Votes |
253
Posts
Kyle B.
  • Highland, IN
Replied Nov 5 2014, 16:36

@Will F.

For my flips, I use a vacant home policy. A local American Family Insurance agent offers this product for me. I purchase the policy in three month increments and any portion of a policy I don't use after three months is reimbursed back to me. To give you an idea of their pricing, I rehabbed a house that I sold for about $160k and the policy ended up costing me about $600 over 4 months if I recall correctly (I think they base the amount of replacement value of the property, not necessarily your total investment). I'm not sure if this type of product is offered in your area of the US. I will tell you, I had to reach out to several insurance agencies before finding one that would offer this type of product.

Thanks,
Kyle

User Stats

2,472
Posts
1,406
Votes
Jason Bott
Pro Member
#2 Insurance Contributor
  • Insurance Agent
  • Nationwide
1,406
Votes |
2,472
Posts
Jason Bott
Pro Member
#2 Insurance Contributor
  • Insurance Agent
  • Nationwide
Replied Nov 6 2014, 09:06

@Kyle B. 

The vacant building policy is an option, but it is not ideal for flipping.  A vacant policy typically excludes the following,

  • Vandalism
  • Building glass breakage
  • Water damage
  • Theft or attempted theft
  • Sprinkler leakage (unless the insured has protected the building against freezing)
  • A builders risk policy will typically cover these perils.

    An added coverage the Builders risk covers is  "Property in Transit".  Think of picking up windows or cabinets form Home Depot and then getting into an auto accident.  Damage to the windows and cabinets would be covered.  The typical limit for "Property in Transit" is usually $10,000 or $25,000.

    Hope this helps

    User Stats

    2,238
    Posts
    529
    Votes
    Mike Hurney
    • Real Estate Investor
    • Boston, MA
    529
    Votes |
    2,238
    Posts
    Mike Hurney
    • Real Estate Investor
    • Boston, MA
    Replied Nov 6 2014, 10:45

    @Jason Bott Very helpful, thanks, Mike

    User Stats

    13,446
    Posts
    8,330
    Votes
    Steve Babiak
    • Real Estate Investor
    • Audubon, PA
    8,330
    Votes |
    13,446
    Posts
    Steve Babiak
    • Real Estate Investor
    • Audubon, PA
    Replied Nov 6 2014, 10:54

    The company that @Jason Bott is referring to is the same company you can find in the profile if @Tim Norris .

    Builder's risk coverage plus liability coverage is what would be recommended.  You might consider worker comp coverage if there will be people hired who don't carry that coverage. 

    User Stats

    13,446
    Posts
    8,330
    Votes
    Steve Babiak
    • Real Estate Investor
    • Audubon, PA
    8,330
    Votes |
    13,446
    Posts
    Steve Babiak
    • Real Estate Investor
    • Audubon, PA
    Replied Nov 6 2014, 10:59
    Originally posted by @Kyle B.:

    @Will F.

    For my flips, I use a vacant home policy. A local American Family Insurance agent offers this product for me. I purchase the policy in three month increments and any portion of a policy I don't use after three months is reimbursed back to me. ...

    It is unusual for the unused premium to be refunded for vacant property policies; most insurance carriers consider the premium to be earned in full and non-refundable when coverage is no longer desired. 

    User Stats

    958
    Posts
    274
    Votes
    Will F.
    • Investor
    • Los Angeles County, CA
    274
    Votes |
    958
    Posts
    Will F.
    • Investor
    • Los Angeles County, CA
    Replied Nov 10 2014, 16:06

    Thanks guys I will likely get a builder's risk and liability insurance.  It's difficult to figure out what insurance is right, especially when we're attempting to squeeze a profit out of this flip.

    I frankly don't want to pay for anything I don't need to.  While at the same time could not afford the risk if something drastic happened. 

    If someone was injured on site and did not have proper coverage I think it could be devastating.  Also, I was even thinking if we eventually stage the house it's quite possible to have vandalism/ theft.

    User Stats

    2,472
    Posts
    1,406
    Votes
    Jason Bott
    Pro Member
    #2 Insurance Contributor
    • Insurance Agent
    • Nationwide
    1,406
    Votes |
    2,472
    Posts
    Jason Bott
    Pro Member
    #2 Insurance Contributor
    • Insurance Agent
    • Nationwide
    Replied Nov 10 2014, 16:45

    @Will F. Once the home remodel is complete, a builders risk becomes void, and you will then need to purchase a vacant building policy.  The NREI program takes this into consideration and covers you through this transition without purchasing a second policy.  That is why the program fits the flipping biz so well. 

    FlipSystem logo
    FlipSystem
    |
    Sponsored
    Learn From Our Team. Earn 100% of the Profits. Join our community of 500+ investors! Avg profit per flip: $14k, Avg effort per week: 4hrs

    User Stats

    13,446
    Posts
    8,330
    Votes
    Steve Babiak
    • Real Estate Investor
    • Audubon, PA
    8,330
    Votes |
    13,446
    Posts
    Steve Babiak
    • Real Estate Investor
    • Audubon, PA
    Replied Nov 10 2014, 16:48
    Originally posted by @Will F.:

    ... 

    If someone was injured on site and did not have proper coverage I think it could be devastating.  ...

    There are two broad categories of injuries that can happen at your rehab - a worker gets injured, and a passerby gets injured.  The passerby injuries will generally fall under liability coverage; worker injuries DO NOT fall under liability.  Worker comp coverage is intended to cover worker injuries, so you only want to hire workers who carry worker comp coverage, or have some exemption (in some places a sole proprietor with no employees cannot get worker comp, and some religions like Amish do not believe in that sort of assistance so they are exempt).

    User Stats

    28
    Posts
    13
    Votes
    Kris Rasmussen
    • Investor
    • Westwood, NJ
    13
    Votes |
    28
    Posts
    Kris Rasmussen
    • Investor
    • Westwood, NJ
    Replied Nov 29 2014, 06:11

    @Jason Bott could you send me the contact info for the NREI program as well?  I'm looking at closing on a flip in the next couple of weeks.

    User Stats

    193
    Posts
    43
    Votes
    Robert D.
    • Investor
    • Bartlett, IL
    43
    Votes |
    193
    Posts
    Robert D.
    • Investor
    • Bartlett, IL
    Replied Jan 1 2015, 09:42

    What if your painter guy has a company called "Javier Rodrigues y Rodrigues LLC". Javier is the owner, he is incorporated, he bought workers comp insurance , he even got glossy business cards.

    Every day he swings by Home Defect to pick up some “workers” for painting job he scores around. He shows you proof of insurance (accord form) and you see e.g. $1M in liability and state minimum in workers comp. you check online…wow the policy is not yet cancelled. There is only one problem ..he EXCLUDED himself from the policy to make it cheaper and to show you that he has proper insurance. His guys are covered no question about it…but what about him ?..if he falls down from that bucket onto your newly delivered cabinets and break his leg…

    I am excluded myself from my WC but that fact is not listed on my accord form…

    Lessons learned: you want to rehab houses ? you want to carry your own WC. Of course one might say …oh well he is an independent contractor, you should sign a contract that says blah blah …great ..then I will tell you once you and your attorney will be fighting the case in court and you will be wasting your money and time deliberating contract law and proving that he had his own brush hence he acted as an independent contract and his attorney will be accusing you of negligence as the work place was unsafe ….I will be looking for a next crib to flip while Javier will be collecting $600 a month state money watching Telemundo

    User Stats

    2
    Posts
    0
    Votes
    Jonathan Hall
    • Pembroke Pines , FL
    0
    Votes |
    2
    Posts
    Jonathan Hall
    • Pembroke Pines , FL
    Replied Jan 1 2015, 10:01

    this has been very informative because I am  currently running into the same as issues, because  I am in escrow for my first flip in a not so desirable area.  Please send me the info on NREI.

    User Stats

    21
    Posts
    4
    Votes
    Ping Chen
    • Cary, NC
    4
    Votes |
    21
    Posts
    Ping Chen
    • Cary, NC
    Replied Jan 2 2015, 11:50
    Originally posted by @Jason Bott:

    @Will F. 

    NREI has the best program for your strategy.  I will send you specific contact info in PM.

    Traditional policies require you to purchase a combination of polices depending on the stage the project is in.  Vacant to Rehabbing to rented or back to vacant when finished.  Each of these stages is a separate policy and usually requires a 90 day minimum premium payment.  The NREI policy covers each stage of the process without having to start and stop policies.

    Good luck!

    I will start my first flip in the next few weeks. Could you send me the contact as well? Thanks.

    User Stats

    1,542
    Posts
    1,091
    Votes
    Kevin Romines
    • Lender
    • Winlock, WA
    1,091
    Votes |
    1,542
    Posts
    Kevin Romines
    • Lender
    • Winlock, WA
    Replied Jan 26 2015, 12:42

    Please send me the NREI info as well. Thanks

    User Stats

    1,573
    Posts
    1,968
    Votes
    Jeff S.#5 Private Lending & Conventional Mortgage Advice Contributor
    • Lender
    • Los Angeles, CA
    1,968
    Votes |
    1,573
    Posts
    Jeff S.#5 Private Lending & Conventional Mortgage Advice Contributor
    • Lender
    • Los Angeles, CA
    Replied Jan 26 2015, 13:35
    Originally posted by @Steve Babiak:

    It is unusual for the unused premium to be refunded for vacant property policies; most insurance carriers consider the premium to be earned in full and non-refundable when coverage is no longer desired. 

    Unusual indeed, Steve, but it's my understanding that NREI does somehow refund the unused difference.

    Flippers will typically want a liability policy with builders risk and vacant policy coverage as well. Some believe a homeowners policy covers them, but it does not. Also, if you are borrowing money, make sure you speak to your lender to to ensure you meet their minimum requirements, as well. They will want to be named as the mortgagee.

    @Ivan Oberon might want to chime in.

    User Stats

    13,446
    Posts
    8,330
    Votes
    Steve Babiak
    • Real Estate Investor
    • Audubon, PA
    8,330
    Votes |
    13,446
    Posts
    Steve Babiak
    • Real Estate Investor
    • Audubon, PA
    Replied Jan 26 2015, 18:17
    Originally posted by @Jeff S.:
    Originally posted by @Steve Babiak:

    It is unusual for the unused premium to be refunded for vacant property policies; most insurance carriers consider the premium to be earned in full and non-refundable when coverage is no longer desired. 

    Unusual indeed, Steve, but it's my understanding that NREI does somehow refund the unused difference.

    ...

    NREI collects premiums on a monthly basis, unlike other insurers who collect 3 months of premium at a minimum. Also, if you need coverage for a bit longer, with NREI it is just keep it in place for another month, but other insurers might not be willing to give just another month - they might want their minimum policy term if a renewal is needed. 

    So in the post I made previously that was quoted just now, I was referring to insurers other than NREI when I said unused premiums stay with the insurer rather than being refunded. 

    Hopefully that clarifies my earlier post. 

    Account Closed
    • Investor
    • Meridian, ID
    50
    Votes |
    133
    Posts
    Account Closed
    • Investor
    • Meridian, ID
    Replied Jan 26 2015, 18:32

    I utilize a commercial general liability policy with all my properties under one policy. It runs about $100 per property with $2M aggregate and $1M per occurrence per property. Check your local Farm Bureau agents. My policy is through Western Community and it covers vacant property. Deductible is $500

    User Stats

    119
    Posts
    41
    Votes
    Ivan Oberon
    • Real Estate Investor
    • Camarillo, CA
    41
    Votes |
    119
    Posts
    Ivan Oberon
    • Real Estate Investor
    • Camarillo, CA
    Replied Jan 27 2015, 07:24
    Originally posted by @Jeff S.:
    Originally posted by @Steve Babiak:

    It is unusual for the unused premium to be refunded for vacant property policies; most insurance carriers consider the premium to be earned in full and non-refundable when coverage is no longer desired. 

    Unusual indeed, Steve, but it's my understanding that NREI does somehow refund the unused difference.

    Flippers will typically want a liability policy with builders risk and vacant policy coverage as well. Some believe a homeowners policy covers them, but it does not. Also, if you are borrowing money, make sure you speak to your lender to to ensure you meet their minimum requirements, as well. They will want to be named as the mortgagee.

    @Ivan Oberon might want to chime in.

     Thank you Jeff!  Yes, this is correct.  We bill on a simple monthly reporting form so we have no minimum earned premiums, like many others, 25%, 50% or even 100% MEP, we waive any co-insurance requirement if you insure for $45 a square foot or more and you only pay for what you use.  I'm happy to answer any other questions you may have about our national program

    Ivan

    BiggerPockets logo
    Find, Vet and Invest in Syndications
    |
    BiggerPockets
    PassivePockets will help you find sponsors, evaluate deals, and learn how to invest with confidence.

    User Stats

    232
    Posts
    95
    Votes
    John Geldert
    • Rental Property Investor
    • East Meadow New york
    95
    Votes |
    232
    Posts
    John Geldert
    • Rental Property Investor
    • East Meadow New york
    Replied Jan 27 2015, 07:43

    @Jason Bott great info, can you send me the NREI program info? Thanks

    User Stats

    11
    Posts
    3
    Votes
    Heather Matthias
    • Spokane, WA
    3
    Votes |
    11
    Posts
    Heather Matthias
    • Spokane, WA
    Replied Feb 5 2015, 06:18

    Perfect timing! Jason we are shopping for an insurance partner can you send me the insurance contact as well? Thanks for the good insight!

    User Stats

    94
    Posts
    10
    Votes
    Stephen Lofthus
    • Real Estate Investor
    • Westfield, IN
    10
    Votes |
    94
    Posts
    Stephen Lofthus
    • Real Estate Investor
    • Westfield, IN
    Replied Feb 5 2015, 06:47

    Jason Bott can you PM me that info as well? Thank you!!