Do You Need Home Insurance on a Flip

Rehabbing and House Flipping 17 Replies

just wondering.

Not exactly. You need builder's risk or empty house insurance. Discuss what you're doing with your insurance agent to determine exactly which. These policies are much more expensive than homeowners.

Jon Holdman, Flying Phoenix LLC

Just completed a rehab, the insurance company gave me an investment policy for about what I pay for my owner occupied SFR - with the understanding that it would only be vacant for a few months, not for the full year of the policy.

I was upfront with them and told them I may resell or choose to rent/lease option once rehab was completed - the alternate strategy...

What insurance companies do you use?

Vacant home insurance will not cover anything in the building. Tools, materials, etc are not covered. I lost thousands of dollars in tools this way once. Id recomend finding a good agent and discussing what you want out of a policy. Make sure to cya if any of your workers get hurt too

It's a local private agency but the policy was through Phoenix Insurance

Originally posted by wheelhouse:
What insurance companies do you use?


My answer is in this next link:
http://www.biggerpockets.com/forums/53/topics/41874-the-best-insurance-for-rehabbers

Some other threads with answers from others on this question:

http://www.biggerpockets.com/forums/52/topics/44702-insurance-questions

http://www.biggerpockets.com/forums/52/topics/41842-property-insurance-

What's your situation on this property?

Do you own it outright cash? Can you absorb the risk of losing all the cash you have in on it and paying 10-30k for demolition costs?

Are you contracting work out?

Where is it located as we head into the spring hail season(hint)?

I get it. Yes I (will) own it outright with cash. Yes Im contracting work. Its not located in any flood zones or where tornadoes or hurricanes are prominent.

My question is, are there any insurance agencies willing to insure a home that will be owned for less than 90 days unoccupied/not primary residence. My other investor friends never insure their properties but I dont think I want to take that chance. I want a piece of mind.

Originally posted by Lisa Monroe:
...

My question is, are there any insurance agencies willing to insure a home that will be owned for less than 90 days unoccupied/not primary residence. ...


Check the first link under my earlier post for your answer :idea:

If you have multiple properties you can get a commercial policy through an insurance and prices go way down.

If it's a flip you must get VACANT insurance (which is a lot more expensive) and many agencies won't touch.

My 10+ policy covers rentals and retail deals, and is very affordable compared to what I used to pay. The other decision you have to make is what to insure the property for? Purchase Price, Purchase Price + Cost, Market Value? Sometimes the agencies come up with market value, which can be a bogus amount in some cases to grab fees.

Originally posted by Steve Babiak:
Originally posted by wheelhouse:
What insurance companies do you use?


My answer is in this next link:
http://www.biggerpockets.com/forums/53/topics/41874-the-best-insurance-for-rehabbers

Some other threads with answers from others on this question:

http://www.biggerpockets.com/forums/52/topics/44702-insurance-questions

http://www.biggerpockets.com/forums/52/topics/41842-property-insurance-


Thank you! Helps.....

Does your bonding company require insurance? I know when last I checked that took many of these things into account before they were willing to provide the bond.

Do you need vacant insurance on a flip that you intend to reside in while the work is being done?

We have clients that take many different approaches to their insurance needs. Here are the three most common policies.

Get a liability only policy. If you are willing to self insure for the amount of cash you have invested in the house, that is an option. After all, insurance is a transference of risk and you decide what risk you can afford to self insure and what amount would cause a financial hardship. Lawsuits are extremely expensive even if you did nothing wrong and win the case you still pay the lawyer. An attorney is going to charge between $5,000-$20,000 just to get started. Liability insurance will pay legal fees and the judgement up to the amount of insurance.

Get property coverage with a higher deductible. Getting a deductible of $2,500, $5,000, or even $10,000 can drastically reduce your insurance rates and protect you in the event of a catastrophic loss. You self insure for the little things, we pay for the big stuff.

Third. Get a comprehensive policy. Yes they cost more but they cover more. Protect your cash flow so you don't have any interruptions in your business. Insurance isn't all bad, especially when you need it.

We always used state farm for our flips as I have many other properties and vehicles insured there. Last week was the first time they declined coverage. They said things had changed. I was given the name of an agent who specialized in coverage such as this. It cost me $538 for 3 months coverage including 1M in liability.

Originally posted by J M:
Do you need vacant insurance on a flip that you intend to reside in while the work is being done?

So, that means this is your residence. Should you have insurance on your residence? Of course. Should you tell the insurance company it is a flip? Of course not. It is your residence.