General Liability Insurance for House-flipping LLC

[Jason Delaney]

My wife and I are flipping houses in the Pittsburgh area, and have set up an LLC for this. We also are required to register the LLC with the Attorney General's Office as a Home Improvement Contractor in order to meet the requirements for the State Workers Insurance Fund to provide worker's compensation insurance for our one potential employee. To register as a Home Improvement Contractor, general liability insurance is required.

The problem we are running into is that finding general liability insurance for a house-flipping LLC is seemingly impossible. No one wants to do this.

I can find general liability insurance, no problem, if the LLC is simply a renovation business.

Are we better off designating the LLC as a home improvement or renovation business that we use solely for the homes we purchase ourselves, and then paying the LLC from the proceeds of the sale, or as the work is completed?

Is there some easier way to fulfill the requirements stated above?

We perform any renovations that don't require any license or certification beyond meeting code requirements. 

We hire out for jobs like roofing, electrical, some plumbing, and any major structural work.

Any advice is appreciated!

[Jason Bott]

Originally posted by @Jason Delaney:

My wife and I are flipping houses in the Pittsburgh area, and have set up an LLC for this. We also are required to register the LLC with the Attorney General's Office as a Home Improvement Contractor in order to meet the requirements for the State Workers Insurance Fund to provide worker's compensation insurance for our one potential employee. To register as a Home Improvement Contractor, general liability insurance is required.

The problem we are running into is that finding general liability insurance for a house-flipping LLC is seemingly impossible. No one wants to do this.

I can find general liability insurance, no problem, if the LLC is simply a renovation business.

Are we better off designating the LLC as a home improvement or renovation business that we use solely for the homes we purchase ourselves, and then paying the LLC from the proceeds of the sale, or as the work is completed?

Is there some easier way to fulfill the requirements stated above?

We perform any renovations that don't require any license or certification beyond meeting code requirements. 

We hire out for jobs like roofing, electrical, some plumbing, and any major structural work.

Any advice is appreciated!

Jason, your not the first and wont be the last to run into this issue. As you suggest above, you are better off having 2 entities. 1 remodeling LLC and another that holds the property.

The contracting LLC should handle all construction, and be a subcontractor of the the Flipping LLC. The Flipping LLC buys the Property and General Liability coverage for the buildings you will be flipping.

The issue with the standard General Liability policy the "Products and Competed operations" section.  This part of the policy will respond to any work you did not the past.  So on the flips, you could be brought back into a claim on Mold, leaky roof, etc.  The standard GL policy is not priced to take on those large claims, so they just decline to offer an option.