All Forum Posts by: Justin Plante

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good article on builders risk above.  One thing I deal with all the time is who purchases the builders risk on a renovation or construction project.  If its ground up construction then typically no property policy is put in place until construction is complete and building is put to it's intended use.  However, builders risk can be purchased by the owner or by the general contractor.  

If you as an investor/owner purchase builders risk then there shouldn't be a need for the GC to purchase builders risk as well (assuming you have a policy that covers owner as well as contractors for builders risk on your projects).  If you are flipping properties and using the same GC then ask them what insurance they are covering for your projects ask them to identify what they are charging you for it and ask them to name you as an additional insured on their builders risk and their GL policy.  If you are purchasing builders risk and it covers owner and contractors then have them remove the charge to you from their budget for your projects.  Also, to be clear, contractors almost always apply overhead and profit to budget items such as insurance in the range of 5-15% of cost.

I like the owner controlling the policy as then they are the first named insured and control things like claims.  Also they get benefit of seeking coverage they desire and can get best cost if they put together a master builders risk program where as @Jay Hinrichs mentioned you can add and subtract properties at will and leverage a lower rate. If you have a lender, they will demand appropriate coverage.

@Jay Hinrichs. I am a brand new member so complete newbie to real estate investing so forgive my jumping in on a topic you are probably already all over. However, I am a 20 year insurance agent who has done lots of property and liability. For the past 12 years I have specialized in doing construction insurance for real estate developers doing projects 10M and up to over $1B and doing what is called OCIPs (Owner Controlled Insurance Programs).

Just my two cents but if you have multiple properties you might look at a commercial package policy that may have the option of blanketing property (one limit covers all properties and contents assuming they are not all in same location as carriers dont like that). May be cheaper and give better coverage for less premium because the likelihood of all properties being damaged at same time is highly unlikely.

Self insurance if done correctly is regulated by each state and you may need some help in order to do it. If you're just talking putting money aside in the event of a loss with no insurance that is up to you but I doubt any lenders would allow that unless you own outright and can do as you choose.

Just a heads up to all we are at the beginning of a hardening property market so expect rate increases that are not pretty. The carriers that do business property are different than those who do one off residential and may provide more appropriate coverage for investors with multiple units.