Cost of Builders Risk insurance policy. Why so much?

5 Replies | Austin, Texas

Hi everyone, I just purchased a fixer in East Austin 78702 for $327K and plan to put about $100K into it. I called to get quotes from two agents on insurance for a six month period and both quotes came in around $1850 including liability coverage. I realize there are many more risks associated with vacant properties and especially ones under construction but I wonder if that's in line with what other investors have seen for insurance quotes. Many thanks.

90% chance you will get broken into or vandalized at least once in East Austin doing a rehab. Gentrification comes with push back (Google "Defend Our Hoodz"). This group, others upset about influx of the affluent, plus the well known knowledge of many flips in the area attract a lot of unscrupulous characters to take advantage. While the number you listed may seem high, it is in line. Install a security system day 1 and tell your insurance you will have this to see if they will give a break. 

Originally posted by @Chris Schorre :

Hi @Nina Hayden I did get quotes from Zurich and Foremost but will get another one. 

Chris, those 2 are the main options in the marketplace for Builders Risk policies.  

There are insurance programs out there for flipping that you could look at, but they are not a traditional Builders Risk policy like you are seeing from Zurich.  So if you don't want to pay for some of the additional coverage's Zurich is offering, then you should consider.

Another consideration, these Flipping programs are month to month, while with a traditional Builders Risk policy, you are locked into that time frame.  If you finish early, you don't get any of the unearned premiums back.

I'll send you a note on who most of my clients use.

 

FYI, I ended up getting a policy through Foremost Insurance (through my Farmers Agent: Farmers owns Foremost) which was a FAR better deal than I first thought because the policy is for 12 months and includes liability. Also, unlike Zurich sells a "fully earned" (that's tricky insurance jargon for non-fundable) 6 month policy, Foremost is month to month. When you're done with your project, you cancel. 

 I was initially considering NREIG and received an attractively priced quote from them but once I read the Google and Glass Door reviews, I deleted that quote. Horrifying. Anyway, I can recommend Foremost and have some inside knowledge that it's a good company as I worked at their HQ for 7 years.