Investor · Fredericksburg, VA · Member since 2011 · 36 posts · 9 votes
Do you guys buy insurance on flip properties? My insurance company Allstate won't insure vacant properties and the agent got a quote from another company that runs $1400 for 6 months. That seems awful high to me but since it is the first flip job I'm doing I'd like to get some advices from you pros what I should do next. Should I eat that high premium or forget it and take the chance? Overall the property is in a very safe community so I don't worry about theft as much. I mainly want to cover any personal liability in case the contract got hurt on jobsite or something happen to the neighbors during the construction. Any advice will be greatly appreciated.
Real Estate Investor · Toronto, Ontario · Member since 2010 · 413 posts · 114 votes
14y
www.affinitygm.com
www.nreinsurance.com
They offer insurance on flips. Looking around $55/month for a builder's risk and around 75k insurance on the property. This is too give you an idea, obviously may be different if your property is worth more.
Investor · Louisville, KY · Member since 2011 · 1k+ posts · 1k+ votes
14y
I am required to hold insurance because I purchase w/ a hard money loan.
I don't know what the value/price point is of your flip property, but for a $110k purchased property w/ about $140k of coveraged and ARV of $210k, I'm paying $95/month right now.
Investor · Fredericksburg, VA · Member since 2011 · 36 posts · 9 votes
14y
$110k purchased price, estimated renovation cost $35k-$40k, ARV of $210k. I want $200k coverage. Looks very similar to Mike's project. My premium comes to $230/month. That's too high to me.
Involved In Real Estate · Las Vegas, NV · Member since 2010 · 341 posts · 86 votes
14y
Yes, yes, yes, did I mention yes? You need to get insurance for a flip. People could fall off ladders while working on your house, property may burn down due to vandalism, there's so many possibilities. If you can stomach a total loss yourself, then go for it, but we always have insurance on our property. Because at the need of the day, I'd rather pay 1400 for peace of mind than get tagged for 150k.
Real Estate Investor · Denver, CO · Member since 2011 · 74 posts · 24 votes
14y
Foremost.
Arcana.
Multiserve
They will all do vacant policies. I would make sure you ask to have vandalism covered which can sometimes be an add on.
Premiums are always more expensive than standard owner occ ones. If you do not get one you are juggling with knifes. Eventually you will get cut.
I have had numerous properties broken into where the appliances where stolen plus the property was damaged.
Make sure you also consider getting general liability policy put into place. We have a 1M general liability to product above and beyond the specific property insurance. If you continue to do flips and or have multiple ones going at a time this is a must.
Lender · Tyngsboro, MA · Member since 2009 · 3k+ posts · 2k+ votes
14y
Insurance on empty house rehab projects is high, because the risk is high, both to you and your lender. Don't mess around with trying to skip insurance, it's cheaper than legal fees if something happens.
Look at it like Murphy's law: if you don't buy it, something horrible will happen, if you do buy it, nothing will happen. Nothing is way better.
Lender · Los Angeles, CA · Member since 2009 · 1k+ posts · 2k+ votes
14y
And, don’t think you can get away with a regular homeowners policy to save some money. If the insurance company finds out that the home was vacant, per their definition, they won’t cover a claim.
Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
14y
Not much more to add than what's been said other than this is just part of the cost of doing business. You want a policy that covers you if someone gets hurt. "Builder's risk", its sometimes called. Vacant house insurance would be sufficient for a property that's empty, but may not cover a situation if you're actively working on it.
Investor · Fredericksburg, VA · Member since 2011 · 36 posts · 9 votes
14y
Thank you all for the advices. I'll contact my insurance agent to look into other insurance company to find possibility of cheaper policy. I think I'm decided to go with insurance cover on this project it is now just a matter of how much I have to pay for it.
Builder, House Flipper · OKC, OK · Member since 2012 · 42 posts · 15 votes
14y
Originally posted by Nick Ye:
Do you guys buy insurance on flip properties? My insurance company Allstate won't insure vacant properties and the agent got a quote from another company that runs $1400 for 6 months. That seems awful high to me but since it is the first flip job I'm doing I'd like to get some advices from you pros what I should do next. Should I eat that high premium or forget it and take the chance? Overall the property is in a very safe community so I don't worry about theft as much. I mainly want to cover any personal liability in case the contract got hurt on jobsite or something happen to the neighbors during the construction. Any advice will be greatly appreciated.
Thanks!
Check with all insurance companies. Your local independants can usually write it through someone like Graham Rogers and its called a builders risk/ rehab policy.
I just bought one for a New spec house with $230,000 in coverage and it was $589 for the year, but builders risk does not usually cover general liability (trip and fall insurance) workers comp is what covers your workers. Make sure all your subs carry it or carry a policy yourself. If you have both of them you'll be fine. If a person sues they are only gonna get the policy limits anyway unless you own half the city your live in and the plantiffs attorney knows that.
Real Estate Investor · Atlanta, GA · Member since 2009 · 339 posts · 126 votes
14y
Same experience here. Initially I was getting my insurance through Allstate and they gave me the line that they could only do it for 90 days if it was vacant. Now that I know better I get the vacant property which you don't get from mainstream insurers.
I would be curious if anyone here gets both, vacant insurance and builders risk or do they have a combined policy?
Real Estate Investor · Toronto, Ontario · Member since 2010 · 413 posts · 114 votes
14y
www.affinitygm.com
www.nreinsurance.com
They offer insurance on flips. Looking around $55/month for a builder's risk and around 75k insurance on the property. This is too give you an idea, obviously may be different if your property is worth more.
Investor · Orlando, FL · Member since 2017 · 3 posts · 1 vote
9y
This is extremely helpful guys. I'm quoting right now and some of the quotes I've received are extremely high. I will check the options you guys posted here!
Rental Property Investor · San Diego, CA · Member since 2008 · 89 posts · 65 votes
9y
American Modern also does vacant policy. I have AM and Foremost. Rates are through the roof, but cost of doing business. Rates increase dramatically if property is in remote area away from fire hydrant/fire station.
Rental Property Investor · Los Angeles, CA · Member since 2014 · 79 posts · 16 votes
8y
Great thread. I used Foremost as well. What insurance do you use AFTER the flip is done, but it's still vacant and on the market? Can I change my foremost to a post-flip type?
Insurance Agent · Nationwide · Member since 2014 · 2k+ posts · 1k+ votes
8y
@Anu G. if you are rehabbing the property, you want to have a Builders Risk form on your policy. This same policy may or may not restrict coverage once the rehab is done and the building is vacant.
Best to ask your agent how many days does the Builders Risk policy extends coverage once the rehab is complete.
The range between some of my companies is 30-180 days before the Vacancy clause kicks in and coverage's like Vandalism and Theft are removed.
Foremost may move you from a Builders risk to a Vacant building policy, then to a Rental Dweling if you rent it out.
Insurance Agent · Nationwide · Member since 2014 · 2k+ posts · 1k+ votes
8y
@Anu G. I am not sure if you are mixing up insurance terminology, but you definitely don't want to reduce your liability, that should stay @ $1M.
Also, moving from a Builders Risk to a Vacant policy should not be cheaper, but the same or more.
To address your original statement, a Builders Risk policy can greatly reduce your coverage's once the rehab is done. This essentially puts you in a position of greater risk.
Example, Theft is covered under the Builders Risk policy, but once you have been granted occupancy by the city, Theft and Vandalism is no longer covered. This is when you need to change policies.
These coverage terms are different between insurance companies, so it is something you need to be aware of and discuss with your agent to make sure your covered.
Rental Property Investor · Los Angeles, CA · Member since 2014 · 79 posts · 16 votes
8y
@Jason Bott Thanks. This is insightful. I'll contact him again.
I'm paying about $37/mo for my personal property's insurance which is worth way more than the rental. That is coming out to about $157/mo. Does this discrepancy seem right to you?
Actually, I found a good article on it (which answers my question - I'll leave it up for others with the same question):
Investor · Cincinnati, OH · Member since 2013 · 56 posts · 33 votes
8y
@Nick Ye@Anu G. I use RealProtect. They have a policy that covers the property a certain period of time as not vacant if it's under rehab, because any home that is being rehabbed is not the same as vacant. After the time period elapses- I think it's 60-90 days maybe- it goes to vacant and they also insure for the ARV value not just the price you paid. Although, my guess is if you had a total loss they'd want some proof the project was finished/market ready and or proof of the improvements. Last year I had two properties insured at same time, both had declared values of over $200k and I think cost was around $210 a month for both. They have various deductible levels as well. And yes, always also have liability insurance/builders risk.
Insurance Agent · Nationwide · Member since 2014 · 2k+ posts · 1k+ votes
8y
@Anu G. There are many variables to what drives a premium; location, building value, sq/ft, etc.
But if your rental is similar to your home, I would expect no more than a 50% difference up or down.
For Airbnb, you can add coverage to your current policy. If your insurance company can not do it, there are many companies out there that can add coverage for Airbnb.
If you are having trouble finding a source, let me know.
FYI - If your properties are in OH, OH is a "Policy Limit" state. Meaning that the insurance carrier is required to pay you the limit stated on your policy, no matter what you have invested into the policy.
So if you bought for $100k, invested $50k, insured for $200k, then had a total loss, the insurance carrier would need to pay you $200k.
Your statement is correct in states that are not "Policy Value" states. Just very important to know what the state law is.