House Flipping Insurance

You will need to secure adequate house flipping insurance upon finding, and purchasing a piece of property that you intend to flip.

This is easier said than done in many cases as insurers are typically wary of insuring property that is vacant. And, since you’re in the market for a house to flip, chances are, your intended property is (or is soon going to be) just that – vacant.

The reason is that a vacant property attracts vandals, thieves, vagrants and assorted other miscreants. Any number of things can happen but the obvious reasons are vandalism and destruction of premises due to fire. Insurance companies simply don’t want the risk. But, like anything else in life, if the price is right, they’ll see that your property is insured.

So just know at the beginning that you will most likely have to pay more for for your house flipping insurance than you would for your personal dwelling (homeowner’s) insurance. Even if it’s in a “nice” neighborhood, that doesn’t mean you’ll have an easier time of obtaining coverage.

picture of insurance policy

What To Do

The simplest way to insure your property is to obtain a builder’s risk insurance policy. This is made easy as it is precisely for property that is new construction or in the process of being remodeled. These types of policies typically cover damages or destruction resulting from fire, lightning, hail or wind storm, some sort of explosion, aircraft, motor vehicle, smoke, and vandalism. One thing to be aware of is that a builder’s risk policy does not cover liability, and should be purchased separately.

As for obtaining liability insurance, check with your insurance agent to see what your current homeowner’s policy has on it with regard to liability (limits and total coverage). You may ask your agent to attach a rider with your current policy to cover your new investment property as well. This is an excellent way to protect yourself during a temporary remodeling project.

Also, be sure to ask your agent how much your coverage for in the chance that someone (worker) would get hurt on your jobsite. It would be a good thing to know in advance should an unfortunate accident happen to somebody.

And …
If you are going to assume the role of general contractor for your project, make sure that all of your sub contractors have proper insurance (worker’s comp insurance as well as liability) to cover themselves, and their workers (if any).

If you hired a workman with no insurance whatsoever and he is severely hurt on your job, you could be potentially liable.

Again, the smartest thing to do is check with your agent for all relevant house flipping insurance details.