House-Flipping Insurance: Essential Coverage For Startups

House flipping is a risky business, and insurance is essential to protect yourself and your property from a variety of dangers and liabilities. Traditional homeowner's insurance won't cover you, as flipping is considered a high-risk activity. When flipping a house, you need to consider three special types of insurance: a dwelling policy, a builder's risk policy, and a general liability umbrella policy. A dwelling policy covers vacant properties undergoing renovation from any physical damage. A builder's risk policy covers direct physical damage to the property during construction and may also cover materials, fixtures, and equipment. A general liability umbrella policy covers bodily injury, such as slip and fall accidents or wrongful death.

Builder's Risk Insurance

House flipping is a risky business, and it is important to have the right insurance to protect your investment. Builders Risk Insurance is a crucial type of coverage to consider when flipping houses.

Builders Risk Insurance is a type of liability coverage, protecting you and your business entity from accidents that occur on the property during construction or renovation. This type of insurance covers direct, physical damage to the property during the construction process, including materials, fixtures, and equipment used in the renovation, if owned by the insured. It is important to note that this policy does not typically cover hired general contractors or workers on-site.

The Builders Risk Policy is particularly relevant for house flippers as it provides coverage for more in-depth structural renovations. Vacant properties undergoing cosmetic renovations are more prone to vandalism, arson, theft, and water damage, which are typically covered under a Dwelling Insurance Policy. However, for structural work, the Builders Risk Policy is essential.

The cost of Builders Risk Insurance can vary depending on factors such as the location, construction type, materials used, and expected completion date. It typically lasts up to 12 months but can be renewed if needed. The coverage amount is usually $1,000,000 per occurrence and $2,000,000 in the aggregate.

When planning a house-flipping project, it is important to consult with insurance professionals to ensure you have the appropriate coverage for your specific needs.

General Liability Insurance

House flipping is a risky business, and insurance is a necessity. Flipping houses requires a special type of insurance coverage that a typical homeowner's insurance policy does not provide. Traditional insurance providers view house flipping as "high risk" and are not designed to protect vacant properties or properties requiring substantial renovation.

General Liability Umbrella Policy

This type of insurance is essential for covering bodily injuries that occur on the property, such as slip and fall accidents or even wrongful death. It is important to note that this policy does not cover hired general contractors or workers on-site. The coverage amount is typically $1,000,000 per occurrence and $2,000,000 in the aggregate.

When purchasing this type of insurance, it is crucial to be transparent with your insurance provider about your business intentions so they can craft a policy that adequately protects you, your property, and your assets.

When to Get Insurance for Your House Flip

It is recommended to start contacting insurance providers as soon as you get the property under contract. Once you take possession, the property becomes your financial responsibility, and you will want to ensure you have the necessary insurance coverage in place.

Companies Specialising in House Flipping Insurance

There are insurance providers that cater specifically to house flippers and real estate investors, offering flexible coverage for vacant properties, renovation projects, and occupied rentals. These companies can include all vacant, rehab properties, or occupied rentals on one schedule and one monthly payment.

• National Real Estate Insurance Group
• Steadily
• Obie Insurance

Vacant Home Insurance

When considering vacant home insurance, it's essential to determine whether your current insurance provider offers this type of coverage and shop around for the best coverage and price.

Commercial Property Insurance

House flipping is a risky business. Vacant properties are more prone to vandalism, theft, fire, and water damage. And that's not all—there's also the risk of accidents and injuries on site. For these reasons, it is essential to have the right insurance coverage to protect your property and your business.

When flipping houses, you are dealing with vacant properties that are more susceptible to these risks. Here are some key considerations for commercial property insurance in the context of house flipping:

• Vacant Home Insurance: This is essential when flipping houses, as standard landlord policies often exclude coverage for vacant properties. Vacant homes are at higher risk of vandalism, theft, fire, and water damage. Vacant home insurance covers these perils, typically for three to twelve months, depending on the provider.
• Dwelling Policy: This type of policy is designed for vacant properties undergoing minor repairs or cosmetic renovations. It covers direct physical damage to the property. It is important to note that dwelling policies do not always cover renovation materials, so you may need to add a 'Builder's Risk Rider' to your policy.
• Builder's Risk Policy: This type of policy is recommended for structural renovations and covers direct physical damage to the property during construction. It can also cover materials, fixtures, and equipment used in the renovation if owned by the insured. Builder's Risk Insurance also provides liability coverage, protecting you from accidents that occur on the property.
• General Liability Umbrella Policy: This type of policy covers bodily injury that occurs on the premises, such as slip and fall accidents or wrongful death. However, it is important to note that this policy typically does not extend to contractors or workers you hire to be on-site.

When purchasing commercial property insurance for house flipping, it is crucial to understand the exclusions and limitations of each policy. For example, basic form coverage only covers perils listed in the policy, while special form coverage covers all perils except those specifically excluded. It is also important to consider the location and value of the property, as these factors can impact the cost of your insurance.

Commercial Auto Insurance

When running a house flipping business, it is likely that you or your employees will use vehicles for a range of tasks, from transporting materials and equipment to travelling between properties. Commercial auto insurance provides coverage for these vehicles, safeguarding your business from financial losses in the event of accidents or other incidents.

This type of insurance typically covers vehicle repairs, medical treatment for those involved in an accident, and legal fees if a lawsuit arises. It is designed to protect your business from liability claims and ensure that you have the necessary funds to cover any vehicle-related expenses.

When selecting a commercial auto insurance policy, it is important to consider the specific needs of your house flipping business. The number and type of vehicles you use, the value of the vehicles, and the scope of your operations will all be factors in determining the appropriate level of coverage. Additionally, be sure to review the policy details to understand any exclusions or limitations, as some policies may not cover certain types of vehicles or specific usage scenarios.

Frequently asked questions