Need to Renew Builders Risk Insurance Policy?
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.
Matt