Insurance Policy

4 Replies

Hi, BP - when purchasing a vacant rehab property what type of property insurance must be in place at close of escrow?  I've been told a couple different things and want to be sure - one person said that renter's insurance policy is sufficient.  I'm not so sure about that.

Karen, you need a vacant house policy- not widely offered.  I've had a number of policies underwritten by Foremost but I think there are a few other companies that write them as well.  Cost for me was roughly 2-3x the cost of a standard landlord/rental property policy.  Don't try to save money and just get a rental property policy.  My agent told me that if an investor were to just buy a standard policy and a claim is made on vacant property with work in progress the insurer won't pay a cent.     

I use Foremost.

@Karen Adams If you will start work right away, then you should move forward with a Builders Risk policy. 

If it will be vacant for awhile, you will want a policy that is written to handle vacant property.  Standard landlord/rental policies remove many coverage's once a property is vacant for more than 60 days.

If your rehab is carpet and paint, and you will have it rented in 15 days, then you could set up a standard Landlord/rental policy will little issue.

Hope that clarifies what policy you need.

If you are using a lender for the purchase they will require you to get a vacant house insurance policy and they will usually issue one very reasonably for short term rates until the re-hab is complete and then get a policy depending if you are flipping or buy and hold.  Hope that helps.  I use hard money at times and they have referrals that cover you for what your needs are.  Most lenders have different qualifications that need to be met before closing on the deal.  Good luck!

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