Do I need Builders risk Insurance - Fix and Flip

Flipper/Rehabber · Berkeley, CA · Member since 2016 · 11 posts · 4 votes

Hi All,

I would like to know if it is necessary or recommended to get a Builders risk insurance as the Developer/Flipper on a Flix and Flip even if my contractor has general liability insurance and workers comp insurance? I am in the San Fransisco Bay area Market. Thank you very much for your feedback! What is the risk of not having one?

Oliver

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Jason D.

Rental Property Investor · St. Petersburg, FL · Member since 2017 · 3k+ posts · 4k+ votes

@Oliver Davis are you using financing? If so, your lender will require insurance, so they would be the ones to ask. I get builders risk, even if my contractor has insurance.

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Jason D.
Rental Property Investor · St. Petersburg, FL · Member since 2017 · 3k+ posts · 4k+ votes
8y
@Oliver Davis are you using financing? If so, your lender will require insurance, so they would be the ones to ask. I get builders risk, even if my contractor has insurance.
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Wayne Brooks
Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
8y
Well, your gc’s liability isn’t going to cover vandalism,theft, your liability or vandals burning your house down......
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Oliver Davis
OP
Flipper/Rehabber · Berkeley, CA · Member since 2016 · 11 posts · 4 votes
8y
Thank you Jason and Wayne for your feedback. Jason, yes I will be using a Hard money loan, so I will check with my lender. Wayne, you are right but then doesnt a standard " Home hazard insurance" work? Or do I need a Builders risk insurance in addition to the home hazard insurance I would purchase in any case when I close on the property?
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Mary Shea
Real Estate Agent · Snohomish, WA · Member since 2015 · 69 posts · 31 votes
8y
It will depend on the work you are doing on your flip & the length of time it will take to complete the work. The cost is 3X your average homeowners policy. I just got a quote for $280 per month during the remodeling phase vs $80 a month after completion.
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Wayne Brooks
Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
8y
@Oliver Davis I thought you meant having builders risk as opposed to having no insurance, relying solely on your gc’s insurance. A typical “homeowner” policy does not cover vacant property, after a certain amount of time anyway, particularly when your intent is to Never occupy....verify with your agent.
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
8y
think of builders risk as fire insurance.. what would happen if your place burned down.. your GC insurance is for liability not Hazard insurance like Wayne mentions above..
you may want your own liability insurance on top of the GC I know I do .. GC goes busto ( which happens and your hanging out there with no liability insurance.)
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
8y
Originally posted by @Mary Shea:

It will depend on the work you are doing on your flip & the length of time it will take to complete the work. The cost is 3X your average homeowners policy. I just got a quote for $280 per month during the remodeling phase vs $80 a month after completion.
Mary is this a multi million dollar property.. most of our builder risk insuring 250k construction loans are in the 800 a year range.. ????
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Account Closed
Developer · San Francisco, CA · Member since 2009 · 37 posts · 22 votes
8y
Review your homeowner's policy about claims that occur during construction if you're going to occupy during work. Don't rely on your GC's coverage for losses. You may be able to write a project requirement that the GC carry builder's risk but you'll get some pushback on this. If I were going to have Builder's Risk on a project, I'd want the policy in my name so that I could manage the claim if it arose. Best of luck!
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Mary Shea
Real Estate Agent · Snohomish, WA · Member since 2015 · 69 posts · 31 votes
8y
@Jay Hinrichs no, it is a 400K property...crazy huh? I went with a different policy that only requires that I replace the deck within 30 days in order to keep the standard policy. $70 per month :)
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