Insurance for fully gutted BRRRR

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I'm about to get another house under contract and I'm using hard money to fund the purchase and rehab. My lender requires insurance and it can be difficult to find a company willing to insure a fully gutted property for the coverage requirements of my lender ($1Million). Does anyone have any recommendations?

[John Mocker]

Matthew,

From the situation you've described, you will need a "Renovation" Builders risk.  The difference is the Renovation Builders risk is used for the situation where there is an existing building.  The policy has a limit for the existing building and a limit for the additional work being added to the existing.  Not all of these type of policies can add Liability coverage so you may have to purchase a separate policy for your Liability.  It sounds like the lender is wisely requiring at least $1,000,000 in Liability coverage for the GC.  Although you can buy shorter terms, if the policy can be cancelled for a refund, consider doing a full year policy.  Some of the markets for Renovation Builders Risk will put an annual policy on installments.  It seems, especially now, the project's expected completion is taking longer than estimated.

The General Contractor should supply you with a certificate of insurance showing that coverage.  I would also suggest you require the GC to have workers comp.  If you have not reviewed the contract you will be requiring the GC to sign with an experienced attorney I would also advise doing that.  They can draft the necessary Hold Harmless and indemnification clauses to protect you.  Discuss ways to avoid mechanics leans from the subs of the GC.  

Lastly, the agent you work with may be able to suggest other things to include in the contact.  Things like requiring that the GC maintain coverage during the whole project, that they make their Liability, Workers Comp., etc primary and non contributory, requiring certain limits (and if the GC's Subs have to have same), etc.