Why even get insurance on a rehab?

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The purpose of insurance is to assign risk to other entities, for a cost. The alternative is to self insure, if you can afford the risk.How much is the house worth, less the land value? Can you absorb/float that cost if the house burns to the ground? And do you have any private or hard money lenders who will need to be paid off, regardless? If you can afford to do so and/or rebuild the house, then self insuring it is certainly an option. But for most of us mere mortals, a $50k or $150k loss on a property would wreck our finances (if not ruin our lives completely), so we pay a relatively small percentage of that to pass that risk on to an insurance company.I suspect the reason your neurosurgeon friends don't carry insurance is they can afford not to.

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He's not asking for permission, he's asking for help and advice.

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If it burns down through arson or incorrectly installed electrical the day all work is completed, before it is sold, can you ride out the loss.

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You are describing the exact reason for insurance, to help cover you for the things that could happen that you can't necessarily identify right now as a risk.It's not just objects, or sink holes, you left out all the liability you have for someone being injured on your property.No insurance is the higher risk/higher return strategy. It will work until it does not. Only then will it become evident the true risks you bore without insurance.

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Most people considering no insurance are looking to goose their returns by a meager amount, they don't have the $1M on the sidelines as self insurance because they are all in already. If they care to save .5% to take these huge risks it's self evident they would never let $1M sit idle in a self insurance bank account... to then lose 5% annually on inflation. If they had money on the side to self insure they would spend it all on another deal and not insure that either.

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First off. Big difference between self insured and uninsured. Self insured indicates insurance, a means of financing the risk. As in do you have $1,000,000 set aside to access if something were to happen. Disney does, that’s why insurance professionals agree that Disney is self insured. But guess what, they even buy reinsurance, a backdrop against catastrophic claims. Just not purchasing insurance is a different matter. Here’s a big reason to purchase, your contractor put in faulty work. At 9 years and 364 days a beam kills a child living in the house. They file suit the next day. In Florida, your on that claim. So you spend a hundred thousand in defense to get to a settlement of $500,000. All of that is out of your uninsured pockets. Don’t worry about your contractor he went out of business 5 years ago and cannot he found. But you could and they pierce your LLC veil because you did not act in a prudent and businesslike manner by carrying appropriate insurance. Most of my property managers are “self-insured” in the fact that they carry a $250,000 deductible. Because they are not worried about the small claims, just like you aren’t. But they are worried about the killer claims.

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Do you drive without insurance too? What about Health insurance?Homeowner's insurance is a necessary expense for protecting you as an investor. You mentioned a bunch of "what if" scenarios, but it's what you DIDN'T plan for that the insurance will help you with.Properties....especially when vacant.... can be very vulnerable to anything from theft to arson and everything in between. Many policies can be customized to reflect the status of your property. In fact, make sure you tell your agent that the property IS vacant because if you don't, many standard policies exclude coverage after a 30 day vacancy period.Someone is watching. If you are rehabbing a property, it means that you have valuable materials going in like appliances, cabinets, fixtures and more. It would be a huge loss to you to lose those items and have to start over. That would eat into your profits far more than a hazard insurance policy will.Plus....it's tax deductible!! :)Best of luck to you!

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We have 2 rehab properties with 2 houses on each property in...rough neighborhoods. I have them covered through REIGaurd for $160 a month for all both properties and all 4 houses. We have had a few break ins on 1 property that I did not claim: low theft amount. $40 per house. I sleep just a tiny bit better knowing I have some coverage in case of a total loss.

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Where do you see that he asked for help? It seems to me he had it all figured out, he does not want to buy insurance because the deductible is too high -- i buy the least amount of deductible but i pay more for my insurance i.e. my car insurance has $50 deductible, i guess he doesn't want that high premium --, he has been out of insurance and does not feel he needs it, he has an alarm system that can protect him or so he says, what else am I missing?

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Hey Charlie hope all is well. Check your inbox I sent you a message.