Builders insurance for Florida flippers?

Question

Good Morning BP!I'm about to begin a project in Ormond Beach, FL, and the house will not pass muster for a normal homeowners policy at the moment. I'm told by an insurance agent that I need a "Builders Risk" policy to cover me during the rehab phase. Looking for any advice or comments on this recommendation, and if it is indeed what I need, who have you found to be the best source for this type of policy?Thanks!

Jared Townsend · Answer

Builders risk coverage is generally used for new construction or very large reconstructions. If you are just doing minor repairs (cosmetic, appliances, etc) then I would recommend a vacant home policy that allows for repairs. These typically run about $900-1200 for a 6 month policy. Deductibles are negotiable from $1000-5000. I hope that is helpful!

Account Closed · Answer

There are builders risk policies designed for rehabs and all standard market policies cover theft of materials and vandalism. Vacant policies do not cover theft of materials or equipment already inside the house.BR also replaces materials used in construction at replacement cost. In my area an annual BR policy (including liability) is cheaper than a vacant policy for six months. I would recommend Checking out US Assures remodelers program. US Assure is part of Zurich which is one of the largest and most reputable insurance companies out there. REIGuard is not an insurance company. They are a wholesale broker for non admitted insurance companies that are not regulated by your states insurance laws and can exclude coverages traditional carriers cannot. It is actually against the law for an agent to use a non admitted carrier unless the risk is denied by a standard carrier first.

Brad McHatton · Answer

Typically, the ones we deal with are in the 1-6 month range through Lloyd's. One thing to remember though is that these policies are fine for liability and true catastrophes (total loss) but they don't cover you for glass breakage (as mentioned above), theft, water damage, etc. Just make sure your agent lets you know what you're actually getting.Also, these are typically "earned premium" policies so try to have a good idea of your realistic timeline. The ones we work with are all fully earned until you get beyond 3 months so a one, two, or three month policy being cancelled early will not get you any type of refund. A 6 month policy is 50% earned and any refund will be pro-rated, but they will keep 50% of the premium at least, along with taxes and fees.

Jared Townsend · Answer

Joel, we typically write vacant home insurance through Lloyds of London.

Tyler Bedle · Answer

I used Kat at Pelican Insurance Agency. Quick google search will bring them up. Offices located in Plantation, FL. Called a bunch of insurance companies listed on few threads on BP and Pelican was one of two that bothered to answer the phone/call me back!

Bill Hinshaw · Answer

REIGuard is a national company that provides a monthly policy and can be cancelled at any time. I've insured all 4 of my flips through them. They run about $210/month for $250k of coverage with a 3k deductible.I had a claim on my last property due to a hail storm, and they were ok to work with. They're a little more particular than your typical homeowner's policy with a company like allstate. All repairs had to be documented with receipts and pictures before they would pay all depreciation. The typical game of the roofing company covering your deductible to get your business is not possible with REIGuard, because they only pay for documented repairs after the deductible is fully met. Not saying that is good or bad, but it helps to know that up front.

Wayne Brooks · Answer

Yes, it's what you need. If your agent doen't offer it, ask other local investors/rehabbers.

Account Closed · Answer

I would think the main reason to get a policy is if someone got hurt on your property, just as kids like to destroy things they also get hurt. I know it sucks that you would be held responsible but that is how is usually plays out in our sue happy society. I always try to keep a enclosed trailer on site so I can keep stuff like Windows not installed yet or tools...ect.. They are more securable and should be able to be added as a rider with stated cargo amount $ to your auto policy.

Northern Denson · Answer

@Tyler Bedle and @Joel Valdez, do you mind sharing the type of numbers that you received for the builders risk policies from Kat at Pelican Insurance Agency?

Joel Valdez · Answer

I called them and Kat was awesome. I'm binding today! Thanks!