What Insurance do I use?

[Don Tidwell]

We have our first offer in and it has been accepted. I have been shopping insurance for over a month. I had General Liability, Builders Risk and am waiting on Flood Ins. to be added. It is higher than we originally budgeted. Can anyone advise me on what insurance is a good choice for House Flipping?

[John Mocker]

Don,

The Renovation Builders Risk policy rates are going to depend on a number of factors:

1. Value being insured (both for the existing structure and the work being done to it)

2. what type of coverage (Named Perils vs the better, Special Form)

3. Deductible

4. Fire protection of the town

5. Other location factors (wind storm for coastal or tornado areas, wild fire risk, etc.)

The only way to estimate the cost would be to use a similar property's rate in the same town.  If you are concerned that the rate is high, get comparisons (if you are using an independent agent ask what other quotes they got to see how much they shopped it)

For the flood insurance, be sure the agent shopped it with a lot of the "private market" (non FEMA) insurance programs. I've seen differences of thousands of dollars between the rates on the same property. These Private Market carriers use their own algorithms to calculate the flood risk so there can be big differences in the rates.