Whether you’re new to property flipping or a seasoned veteran, renovating a home comes with a unique set of risks, so it’s important that you have the right insurance coverage. At National Real Estate Insurance Group, we believe having the proper coverage for your investment is paramount. Keep reading to learn about the key components of insuring a renovation property, including FlipShield- our new liability product for DIY flippers.
Dwelling coverage protects against sudden and accidental physical damage to your property. For instance, if severe weather were to cause a tree to fall on your roof, resulting in structural damage, you may be covered for the cost of repairs or replacement.
National Real Estate Insurance Group offers two coverage form options for you to choose from: Basic and Special. For locations undergoing renovations, we highly recommend Special Form coverage, as it extends to Theft and Water Damage- two perils that are more likely to occur at properties undergoing renovation. Read about the differences between Basic and Special Form coverage here.
It’s not just the physical structure that requires protection. As you may know, when you own a property, you have liability risks. A Premises Liability policy offers you protection against liability claims that can arise from incidents on your property. Essentially, this coverage protects you from everyday risks, like a guest slipping on an icy walkway. Click here to learn more about Premises Liability.
DIY flippers- this is very important! If you are doing some or all of the renovation work yourself, you have other liability exposures that are not covered. Premises Liability does not cover you for incidents that occurred as a result of the renovations. To mitigate these risks, you need a product like FlipShield.
FlipShield- Liability Coverage for DIY Flippers
FlipShield is a liability-only policy designed for the completed operations of property owners who perform some or all of the renovation work themselves and are not professional contractors or artisan/subcontractors. As an investor, you likely do not have access to the specific liability coverages that professional contractors benefit from. And while Premises Liability is one of the most important coverages to have, it does not fully address your unique liability exposure as a DIY flipper. The following are some scenarios in which FlipShield may provide coverage:
Products & Completed Operations (P&CO)
Let’s say you built a deck as part of your flipping operations. The deck is considered a product or completed operation. If the deck fails and causes bodily injury, defense costs and awarded damages may be covered.
Coverage is extended one year after the expiration date of the policy.
Personal & Advertising Injury
If a person or entity claims you made false or damaging statements about them in your marketing materials, and they suffered as a result, defense costs and awarded damages may be covered. This includes defamation claims, which encompasses libel and slander.
If a person claims you invaded their privacy through your advertising or marketing practices, such as using their image without consent, defense costs and awarded damages may be covered.
Flipping properties can be a highly profitable investment strategy. But, as we’ve discussed, it also comes with some unique risks. The good news is that having the right insurance can help mitigate risk and keep you on the path to success! Contact your Client Service Advisor to learn more about coverage options for flip properties.
MacKenzie joined NREIG in May of 2022 as our content writer. She graduated from Park University with a Bachelor of Arts degree in Multimedia Journalism & Public Relations. MacKenzie has experience writing for multiple publications on a wide range of topics.