Insuring Rehab Property
Help!
I'm about to close on my first rehab property and I need advice about insurance.
Since I will not be living in the property while I'm working on it, most insurers will not underwrite a vacant building. I've checked out fire/liability only, but it's nearly $2,000 a year. I am not incorporated.
Any advice would be most appreciated! Thank you so much!
Find an agent who deals with Zurich - they have fairly affordable builder's risk policies. They don't include liability, but I've been able to get them for under $1000/year.
Check with an Agent that represents Foremost and/or AMIG (American Modern). They are companies that specialize in the rehab/vacant insurance market. They also have contracts that include liability protection...
I am also having difficulty finding insurance for a rehab; I am located in the state of Florida, and none of the suggested insurers would write a policy. (AMIG said their underwriter, sunbelt insurance did not write policies on anything other than mobile homes). Anymore suggestions? :-? Im not looking for a great deal - just some insurance - ANY insurance!!! Thanks!
If you've got a real estate investors association there, they can usually give you referrals. Have you tried contacting an Independent agent, and asked them? What about who you're financing the property through, have you asked them who normally insures properties they finance? If you're buying it thru a wholesaler, ask them if they know someone. The point is, you gotta ask for information, if you expect to receive it. Posting on a board like this is difficult to get local information, because we're not in your area, and what we say may or may not hold true there.
Look in the yellow pages for insurers who handle contractors. They can sell you Builder's Risk.
Builder's Risk insurance lasts only for the life of the project. It's really designed for construction projects, so you'll have to consider your house a construction project.
Hello again.
Thank you all for your help. I just wanted to report back and let you know what I ended up with:
I found a builder's risk policy with Zurich, it was very reasonable. Since it didn't cover liability, I attached additional liability coverage to my existing homeowners policy on my house. All for about $550/year.
Thanks again for all the hot tips!
You did much better than me!!! Zurich wouldn't underwrite anything at all in my area - thanks to the last few hurricanes that overwelcomed their stay; finally, I did exactly what was suggested, plugged away at the phone book, and found a specialized Builder's Risk policy, with liability, in a 3 month or 6 month policy, that can be renewed as often as needed. I know I need a minimum of 6 months, so I'll be shelling out $1285.10, but hey, I got 'er done!
Thanks again - DJ
Nan,
I know it was tough to get it done, but be wary of tying in your pesonal liability coverage to a rental. It contradicts a lot of asset-protection planning and entity selection you may do.
Best regards,
Tim[ Edited by norrist on Date 12/01/2004 ]
Creative, I feel your pain!
Insurance here in FL has gotten IMPOSSIBLE! You would not believe (or maybe you would) the rings I had to jump through a month ago just to change the coverage on a rental with an insurance company I already had it insured with! I had gotten it as a fixer-upper and insured it only for fire. Firgured that was the most likely thing that would happen, as we do the work ourselves. Once the work was done and the home was rented, I wanted to change the coverage. They wanted a full list of the value of all the improvements, and a $500 appraisal in addition to the appraisal I had just had, to detail everything that had been done with a depreciated value of the improvements.
I wound up leaving that insurance company and going with Citizens. Blech.
And then they sent a letter to the wrong mortgage company letting them know I had cancelled the insurance! Inteptitude....thy name is FL insurance...
Hi Lady Grey,
Do you have a weblink to Citizen's you could share? There are a few of them out there. You can PM me if more comfortable. Thanks! Tim
I have also ran into the insurance wall. My agent (who I have worked with for several years) writes a rental policy for the property.. based on the question, "might you rent the property after rehab?" My answer is always yes... I might depending on the market. He is comfortable with my intent to sell the property. The rental rate from Farm Bureau Insurance is substanitally cheaper the Builders Policy that my agent also offers.
webuyhouses,
Please check the contract and the vacancy clauses it should contain. They may be under "definitions" and/or "exclusions". Your Agent's agreement to cover based upon "intent to occupy" may or may not coincide with the actual contract language. Just be sure you are covered correctly!
Tim
I have been hearing some awful things about citizens even from one of the agents who underwrites from them. Just a heads up.
Quote:
On 2004-12-04 20:13, karensilver wrote:
I have been hearing some awful things about citizens even from one of the agents who underwrites from them. Just a heads up.
I know they are not good. I am sorry, norrist, I wouldn't recommend them to ANYBODY. But I could find no-one else willing in FL to insure an older, frame, rental home, even though it has been completely rehabbed.
I have neighbors down the street who had 2 trees go though their house during Jeanne. They have only just seen an adjustor as of Friday Nov. 26. They have gotten no money as of yet, and have had to live with her parents just to have a roof over their heads.
Their insurance company? Citizens.
No problem. Thanks for the heads up! Happy Holidays!
Tim
Well the insurance prices I am seeing here aren't bad after what my insurance agent just quoted me for my liability policy....$5,000 a year :-x Wish I could get by with just a BR policy. We had let our insurance lapse as we were busy concentrating on setting some other things up. Guess we should have kept paying as over the last 12 months the insurance industry has went insane.
I use Statefarm to insure my houses without any problems. Rates are fair based on things I've seen, about $750.00 a year for $80,000 worth of coverage even while rehab.
How much of the builders risk/liability are required to be paid at closing? If I take out a policy for six months, do I have to pay that six months at closing or just for the month?
Can someone answer this question please??
I recently was told by an agent that I would have to pay for Builder's Risk policy upfront-not monthly. I would also have to do the same w/ what is called a Vacant Dwelling policy which covers the property after the rehab has been completed. The only type of coverage that I can pay on a monthly basis is the General Liability. Is this the norm that you seasoned investors experience??
Thanks
God Bless
I called Zurich and they referred me to local agents in my area. I purchased a one year Builder's Risk Policy for $350.00
Had the fun of finding insurance on a recent Rehab myself. There were two ways around it that the agents came up with for me (although the builders thing sounds like a plan as well).
The first was to tell them you intended to rent it out. This is what several agents suggested, they figure you're going to either rent it our or sell it and rentals are often times vacant for periods of time anyway.
The second way of doing it is to run it as a vacation property. I spoke to State Farm and while they wouldn't touch the property as a rental or as a vacant property they would do it as a vacation/2nd home. The only contraint was that they'd only do that if they covered my primary residence as well. I'm guessing other insurers have a similiar policy but many of them I spoke to could do more if it was the 2nd or 3rd property they were insuring.
I ended up listing it with another company as a rental since I was in a hurry and didn't want to change my own insurance. Obviously read the fine print.
Lie and tell them you brother is renting from you. The reason that they will not insure is that vacant buildings are targets for vandalism and fire.. I would suggest buying several light timers and a cheap radio. Park a car there and move it around.
Isn't the purpose of a general liability policy to cover the workers on the property? If so, shouldn't each sub contractor carry their own workman's comp and general liability insurance??
Someone please elaborate a little on exactly what the liability coverage is for.
Thanks
God Bless
if you are intending to resell or rent the property, what can one do about the "vacany clause", after the 60 days if they property is still vacant, what can one do about insurance at that point.
Don't lie...insure it correctly. If you lie, not only can the insurer deny a claim, in many states insurance fraud is a felony...
Believe me, if an insurer can find a way to deny a claim...they will.
Quote:
On 2005-01-14 15:57, KSchevis wrote:
Lie and tell them you brother is renting from you. The reason that they will not insure is that vacant buildings are targets for vandalism and fire.. I would suggest buying several light timers and a cheap radio. Park a car there and move it around.
Find the Agent that will insure it with the correct contract. DOn't trust them to "skirt the issue". If an insurer can find a way to deny a claim...they will!
Quote:
On 2005-01-12 20:09, Faerl wrote:
Had the fun of finding insurance on a recent Rehab myself. There were two ways around it that the agents came up with for me (although the builders thing sounds like a plan as well).
The first was to tell them you intended to rent it out. This is what several agents suggested, they figure you're going to either rent it our or sell it and rentals are often times vacant for periods of time anyway.
The second way of doing it is to run it as a vacation property. I spoke to State Farm and while they wouldn't touch the property as a rental or as a vacant property they would do it as a vacation/2nd home. The only contraint was that they'd only do that if they covered my primary residence as well. I'm guessing other insurers have a similiar policy but many of them I spoke to could do more if it was the 2nd or 3rd property they were insuring.
I ended up listing it with another company as a rental since I was in a hurry and didn't want to change my own insurance. Obviously read the fine print.
Shamund---
The liability is for the third party that may be injured on the property, not the workers. Slips/falls, the kids partying in it while under rehab, etc... etc...
Workers comp proof should be required from all contractors and their subs...
Quote:
On 2004-11-10 13:01, creativeresidential wrote:
You did much better than me!!! Zurich wouldn't underwrite anything at all in my area - thanks to the last few hurricanes that overwelcomed their stay; finally, I did exactly what was suggested, plugged away at the phone book, and found a specialized Builder's Risk policy, with liability, in a 3 month or 6 month policy, that can be renewed as often as needed. I know I need a minimum of 6 months, so I'll be shelling out $1285.10, but hey, I got 'er done!
Thanks again - DJ
I'm in also FL - who did you end up going with?
thanks