Vacant Property Insurance Issues
My insurance agent has informed me that it is very difficult to get insurance on rehab/forclosure homes, especially if they will be vacant. And, if you can get it, ("if" being the key word), the policy would be anywhere from $1500-$2500 and the property would have to be in very good shape.
Does this sound right? How do you get Insurance on the foreclosed vacant properties? Or do you? I would hate to pay cash for a property and watch it go up in flames with no insurance.
All opinions/comments are very much appreciated.
Tom
NJ's insurance laws make things a bit tougher, but the Agent may not be too far off, depending on many factors. Carry HIGH deductibles and try to combine properties and policies...Check Foremost or American Modern andsee if they are available in NJ. Best regards,
Tim
You are looking for a remodeler's builders risk policy. I have gotten mine through Zurich. My highest cost for property only coverage has been $480 for 12 months.
Make sure you protect your interests from the liability perspective as well...insurance, entity creation, etc...
myfrogger - what does a "builder's risk" policy cover? That's a LOT cheaper than homeowner's on a vacant property; my last rehab cost about $1400 a year through Foremost (because it was vacant).
Your Foremost policy covers property & liability....the policy Frogger mentioned covered the property ONLY...
Thank you all for the great information!
Foremost Insurance is active in NJ so I will give them a call today, as well as some others.
Do I need to replace the builders risk policy after rehab is complete with a fire policy or will the risk policy remain in effect until resale?
As for liability issues, we will be purchasing the property through an LLC, so personal liability should be minimized.
Thanks again for the comments. They have been very helpful!
Tom
The Foremost policy will be fine after-rehab, unless you need the policy more than a year. In most states we operate, their vacan policy only runs for 12 months. Your LLC is a "buffer" for your personal liability. However, don't forego liability coverage for the LLC. Remember, even the "bogus" claims usually require a defense...your liability insurance pays such costs...your LLC won't!