What Insurance should I get for my fix and flip house?

[Noman Aslami]

Hi all,

Just got my first house to flip. I am wondering what kind of insurance and from where should I get for this property? There won't be any structural work involved in this flip. Please suggest. Thank you!

[John Mocker]

Norman,

The policy I used most often on the fix & flip situation you described is a "Renovation Builders Risk" policy.  It provides coverage for the existing structure and for the renovations, as they are incorporated.  Some policies will include Liability coverage.  If not you should get coverage sepparately.

The Coverage for the existing structure is generally written on an "Actual Cash Value" (ACV) basis.  That is calculated as the Replacement Cost (RC) (cost to rebuild today with like kind and quality) minus the depreciation.  An estimate for the ACV might be the market value minus the land value but that is just an estimate.   The renovations would be valued at the Replacement Cost of the work.

Renovation Builders Risk policies can be issued on a annual basis or 3 or 6 month terms.  Be sure to find out if the policy is cancellable for a refund if you finish early.  I try to write 12 month policies that will refund.  If that option is not available then I will look at shorter terms.