Need to Renew Builders Risk Insurance Policy?

3 Replies

We're in the middle of our first rehab for a buy and hold, two-unit building.  Demo is complete and brand new electric, plumbing, HVAC, etc. are about to be installed starting next week. 

In order to close on the 203k loan, the lender required we purchase a builders risk policy.  Because of delays with originally closing the loan (which we finally closed back in November 2014), the 6-month policy is about to expire and the insurance agent says we can only renew for either 6-months or 12-months even though the rest of the project should be wrapped up by April. 

Our contractor told us that we don't need to renew the policy because a) we're not doing any work to the structural walls or foundation and b) he carries his own liability insurance which would cover us in the event anything happened to the house before we can get it rented and get a Homeowner's policy.

Does this sound right?  Should we renew the builders risk even though our contractor has liability insurance?  Again, this is our first rehab so any help is greatly appreciated.


look up the company in the profile of 

@Tim Norris  where you should be able to get coverage on a month to month basis. The contractor obviously does not know insurance well enough to give proper advice; the perils that his policy covers are not going to help you much when you experience a peril that isn't covered. 

Your contractor's GL isn't going to cover any vandalism, or when the house gets burned down due to those vandals.  Yes you need builders risk, and it's usually cheap enough that the 3-6 month minimum is insignificant.

@Steve Babiak  @Wayne Brooks

Thank you both so much for your replies.  I reached out to @Tim Norris' insurance company and waiting to hear back from them.

It's frustrating - I've been doing so much reading and research leading up to this first rehab and even with everything I had done, I knew I was going to learn a lot "on the ground" so to speak, but the issues that have been popping up, mainly due to advice we've relied on from "experienced professionals", have caused so many of these headaches and fire drills and lost $$.  I'm quickly learning that I just can't rely on anyone but myself and that's pretty demoralizing. 

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