Insurance Essentials for Fix-and-Flip Properties

The right insurance protects your investment from catastrophic loss. Here's what coverage you need.

Standard homeowner's insurance doesn't cover fix-and-flip properties. You need specialized coverage designed for investment properties under renovation, and the consequences of being underinsured can be devastating.

Builder's risk / renovation insurance: This covers the property during the renovation period against fire, theft, vandalism, weather damage, and other perils. Policies typically run 6-12 months and cost $1,000-3,000 depending on property value and scope of work.

General liability: Protects you if someone is injured on your property during renovation. This is especially critical since construction sites are high-risk environments. Minimum coverage should be $1 million per occurrence.

Vacant property insurance: If there's a gap between acquisition and renovation start, or between renovation completion and sale, standard vacancy exclusions may apply. Dedicated vacant property coverage fills this gap.

Contractor requirements: Require all contractors to carry their own general liability and workers' compensation insurance, and get certificates of insurance before they start work. This protects you from liability for on-site injuries.

Flood and earthquake coverage: Standard policies exclude these perils. If your property is in a flood zone or seismic area, you need separate coverage.

Best practice: Work with an insurance broker who specializes in real estate investor coverage. They can structure a portfolio policy that covers multiple properties efficiently.