House flipping involves significant risks that require specialized insurance coverage beyond standard homeowner’s policies.
This quick guide breaks down the essential insurance types needed when flipping houses.
Essential Insurance Coverage Types for House Flippers
- Builder’s Risk Insurance
- Covers property damage during renovation
- Typically lasts 3-12 months
- Protects materials and equipment on-site
- General Liability Insurance
- Protects against third-party injuries
- Covers property damage claims
- Recommended coverage: $1-2 million
- Vacant Property Insurance
- Required when property is empty
- Standard policies void after 30-60 days vacant
- Higher premiums than regular coverage
Additional Coverage Options
| Coverage Type | Purpose | Typical Cost Range |
|---|---|---|
| Workers Compensation | Required if employing workers | $1,000-4,000 annually |
| Tool & Equipment | Covers stolen/damaged equipment | $500-1,500 annually |
| Commercial Auto | For vehicles used in business | $1,200-2,500 annually |
Tips for Securing Coverage
- Get multiple quotes from different insurers
- Bundle policies when possible for discounts
- Document all renovations with photos
- Review coverage limits quarterly
- Update policies as project scope changes
Common Insurance Providers
These insurance companies specialize in house-flipping coverage:
- Nationwide (1-877-669-6877)
- The Hartford (1-866-467-8730)
- Liberty Mutual (1-800-290-7933)
- Travelers (1-866-336-2077)
Warning Signs of Inadequate Coverage
- Exclusions for renovation work
- Low liability limits under $1 million
- No coverage for theft or vandalism
- Missing vacant property provisions
Contact a licensed insurance agent specializing in real estate investments to review your specific needs.
Cost-Saving Strategies
- Maintain good safety protocols to reduce premiums
- Install security systems for discount eligibility
- Pay annually instead of monthly when possible
- Maintain clean claims history
- Choose higher deductibles for lower premiums
When to Update Coverage
Project Milestones Requiring Review:
- Starting major renovations
- Adding new contractors or employees
- Purchasing new equipment
- Changes in property value
- Reaching project completion
Documentation Requirements
- Before and after renovation photos
- Contractor licenses and certifications
- Building permits and inspections
- Property value assessments
- Security system certificates
Conclusion
Proper insurance coverage is crucial for protecting house-flipping investments. Start with essential coverage types, regularly review policies, and adjust protection as projects evolve. Work with experienced providers who understand real estate investment needs.
Remember that saving money on premiums should never compromise adequate coverage levels. The right insurance strategy provides peace of mind and financial protection throughout the flipping process.
FAQs
- What types of insurance do I need when flipping houses?
You need builder’s risk insurance, general liability insurance, property insurance, and workers’ compensation insurance if you have employees. Professional liability insurance is also recommended if providing design services. - Does a standard homeowner’s policy cover house flipping projects?
No, standard homeowner’s insurance policies do not cover properties under renovation or vacant properties being flipped. You need specific construction or renovation insurance coverage. - How much does house flipping insurance typically cost?
Builder’s risk insurance typically costs 1-4% of the total construction budget, while general liability insurance ranges from $500 to $1,500 per project, varying based on location, project size, and coverage limits. - What does builder’s risk insurance cover during a flip?
Builder’s risk insurance covers property damage during construction, including damage from fire, wind, theft, vandalism, and certain natural disasters. It also covers building materials and equipment on-site. - When should I get insurance coverage for my flip project?
Insurance coverage should be secured before any work begins on the property, ideally at the time of purchase, and maintained until the property is sold to the new owner. - Are contractors’ insurance policies enough to protect my flip investment?
No, while contractors should have their own insurance, you need separate coverage as the property owner to protect your investment and liability exposure fully. - What happens to my insurance coverage when the flip is completed?
Once renovation is complete, you’ll need to transition to vacant property insurance if the property remains unsold, or standard property insurance if you’re renting it out. - Does house flipping insurance cover theft of materials and tools?
Yes, builder’s risk insurance typically covers theft of building materials, but tools and equipment usually require separate inland marine coverage or contractor’s equipment insurance. - What liability risks should my insurance cover during a flip?
Your insurance should cover bodily injury to workers or visitors, property damage to neighboring structures, construction defects, and potential lawsuits from buyers after the sale. - Do I need different insurance coverage for multiple flip projects?
Yes, each flip project typically requires its own separate insurance policy, though some insurers offer portfolio policies for multiple properties under one master policy.
