Insurance for tenant occupied REOs?

Question

I'm thinking of buying a REO that will require me to evict the previous homeowner. Once he's out, I plan on occupying the house as my primary residence. But in the intervening few months required to evict him, what kind of building insurance can I get to protect myself against fire, earthquakes...? This scenario doesn't seem to overlap with a) normal homeowner's insurance as I'm not living there yet b) landlord insurance (we don't have a contract) or c) flipper insurance (i'm not renovating an empty building.)

Any ideas?

Zhao Huang · Answer

Thanks guys for all of the helpful suggestions, especially about getting an insurance agent to do the legwork for me. I'm still unsure whether eviction of a past homeowner constitutes as a 'rental' and that I'm a landlord and I wasn't willing to test this in court in case the house did burn down. So when I called three agents (in the LA area), I explained in detail the exact situation that I was facing. Two of them weren't able to find any coverage, one of them had to do some digging but was able to find two separate companies to cover hazard/vandalism + liability. For reference, to insure ~$500K, it's going to cost ~$1700/year (not including earthquake).

Anyway, thanks for the helpful suggestions again! (Now wish me luck on the eviction!)

Eric Belgau · Answer

@Zhao Huang You can (and should) cover it as a rental (landlord insurance) while you have a tenant in there.  Once the inherited tenant is out, you can convert to a homeowner's policy.  If the lack of a contract presents a problem with your preferred carrier, don't be discouraged.  It can be done.  Curtis gives good advice:  a knowledgeable broker can help with virtually any situation.

Darron Stewart · Answer

Check with your agent, if nothing there ask for a referral.  May need to look into a builders risk policy, usually $500 for 6 months.  Gives you the time to  rehab before moving in, I use them for buy and holds that will take longer than 30 days to put tenant in...

Curtis Bidwell · Answer

A good/knowledgable insurance agent is invaluable in the RE business.  If you don't yet have one that understands an investors needs find one.  They should be able answer the specifics of your questions. There are many special cases that they can advise you on.