Getting home owner's insurance while rehabbing

[Account Closed]

Hi, we are excited to soon be closing on our first deal. We will be rehabbing a home that will probably take 2-3 months for the rehab. Is there an specific home owner's insurance policy for rehabs? the property is located in Concord NC. Does anybody have any recommendations? what is the average cost for insurance on a vacant home? Thank you!

[Dwight Rigel]

There are two distinct differences in insurance policies while home is vacant and being rehabbed.  It is important to know which you should buy as one will typically not offer liability protection if you are acting as the GC and it's nice to have in case something were to happen. 

Typically the deciding factor is whether or not there will be structural work (moving load bearing walls, etc.).  The two options are Vacant and Builders Risk.  Vacant will typically be underwritten and accepted by carriers that offer vacant policies and include premises liability.  If it's kitchen updates and flooring you will get a better price and coverage by using this type of policy.  If on the other hand the carriers listen to your project and decide you only would qualify for a Builder's Risk policy then you will need to ask if they will provide liability based on your circumstance (are you using an insured GC other than yourself or will it be you doing the work.

Once you know which see if you can get a DP3 or Special Form rather than a DP1 or basic, if not shoot for DP2 or Broad Form.  The Special and Broad cover more types of losses and are typically a replacement cost basis rather than a depreciated settlement but make sure of that as that part can be endorsed on or off.

With all of that being said markets are different and appetites from carriers are different around the country.  Be sure you have a record (email) of what you told the agent or company so if a claim occurs you have proof that you were honest and forthright in your description of your project.

Good luck and have fun.