What is the yearly cost for insuring a rehab property prior to sale/flip?

8 Replies

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There are lots of different insurance products that you might want to consider, depending on your situation.  I'm certainly not an insurance expert (in fact, I know very little about it), but in my experience/opinion, here are the major things you should be thinking about:

- Builder's Risk Insurance:  This is vacant-property coverage that will cover various aspects of the property while under renovation.  Some policies will cover things like vandalism and theft, some won't.  Generally good for catastrophic damage -- fire, fallen trees, etc.

- General Liability:  This will cover any damage you or your contractors do to other people's property.  You can have all your contractors carry this for themselves, and if you don't have any employees, you are probably well covered.  But, if your contractors don't all carry liability and/or if you have employees, you may want to get it.

- Workman's Comp:  This will cover injury/death to your contractors on the job.  You can have your contractors all carry this for themselves, and if you don't have any employees, you are probably well covered. But, if your contractors don't all carry workers comp and/or if you have employees, you may want to get it.

- Umbrella Coverage:  This will often cover you when other types of liability are over-extended.  If you have any personal assets, it's probably good to have an umbrella policy.

In terms of pricing, it will depend on lots of different things, and I couldn't even begin to tell you how much it would cost YOU on your projects.  But, you should find a good insurance agent/broker and have the conversation...

Great rundown above.  My contractors carry their own insurance and I pull a builder's risk policy for my projects.  I do not use an umbrella product but I could see it being beneficial for someone doing several projects at once or as J Scott says if you have lots of personal assets to protect.  I would also add that if you are using any type of traditional financing for these properties your lender will most likely require a builder's risk policy at minimum.

Cale Ferguson, Real Estate Agent in SC (#88326)
(803) 212-5202

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This post has been removed.

Originally posted by @Account Closed :

Thank you! Which company do you use for the builder's risk product and what are some of the rates per year per property?

Rates will vary based on:

- Location

- Amount insured for

- Items Covered

- Type of Coverage (ACV vs Repair)

- Inclusion of Liability or Not

My most recent policy is about $65/month.  But again, my location, property value, coverage, etc., is likely to be very different from yours...

Originally posted by @Account Closed :

Sure.. it does seem though that the contractor's coverage 'should' cover the sub contractors as the licensed contractor sort of 'has' to have insurance.

 Typically, a licensed contractor will be required by the licensing organization to carry a specific amount of liability coverage.  That said, the specific amount is the minimum, and it's typically very low.  On type of that, most contractors aren't required to provide proof of workers comp insurance to get their license, so they may or may not carry WC.  And many contractors will hire subs and not verify whether they have insurance or not.  If they don't, and they get hurt, it may very well fall back on YOU.

@J Scott Can you share the name of the insurance agency you are using? I understand there are variables but that's much less than I am able to find. What carriers are they using? Appreciate the help. 

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