Understanding Insurance Needs for BRRRR Investing

Summary

The BRRRR method—Buy, Rehab, Rent, Refinance, Repeat—requires insurance that evolves with each phase. Risk-appropriate coverage and an investor-focused insurance approach helps BRRRR investors avoid gaps and ensure long term success.  

What is the BRRRR Method

Popularized by BiggerPockets, the BRRRR method of real estate investing involves purchasing a distressed or undervalued property, renovating it, renting it out to produce cash flow, refinancing to recover capital, and repeating the process with additional properties. Unlike fix-and-flip investing, BRRRR investors intend to hold their properties long term after completing renovations, which creates a different risk profile and unique insurance needs.  

Can this method create insurance challenges?

Yes, this method can create insurance challenges if you’re not working with an agent (or agency) that understands BRRRR investing. Each phase comes with a change in primary risk exposure, and not all insurance programs are built to adapt easily to those shifts.  

Many standard insurance providers offer policies on an annual contract. So, when a property’s status changes, its policy must be canceled and rewritten, which can delay your business dealings and trigger minimum-earned fees. National Real Estate Insurance Group’s investor-focused program was built with these transitional phases in mind, so as properties move from vacant to renovation to tenant-occupied, your coverage is never interrupted.  

Coverage Requirements at Each Stage of BRRRR

As it pertains to insurance, the most critical phases of the BRRRR method are Buy, Rehab, and Rent, as Refinance and Repeat do not require unique policies beyond those stages.  

Please know, a homeowners insurance policy never provides appropriate coverage for any investment property.

Buy Phase (Vacant Property Insurance)

Newly acquired or temporarily vacant properties carry higher risk exposure than occupied rentals. Without tenants present to notice issues, vacant locations are more susceptible to vandalism, theft, fire, and liability claims from trespassers.  

Basic Coverage Needs & Considerations:

• Dwelling coverage to protect the physical structure 

• Consider Special Form for Water Damage and Theft coverage to be provided 

• Premises Liability coverage for injuries or damages that may occur on the property  

Rehab Phase (Renovation Insurance)

Renovations can significantly increase risk due to construction activity and on-site materials and tools. Renovation insurance can help protect against losses like fire, weather-related damage, or theft of materials during construction.  

It is extremely important that your coverage aligns with the scope of work being performed. To ensure you’re properly protected, it’s a good idea to discuss your renovation intentions upfront with your insurance agent. As a general rule of thumb, a property’s insured value should be the sum of the building value (purchase price minus land value) and your renovation budget.  

 Be aware that physical damages occurring during the renovation phase are settled based on invested capital at the time of loss. 

Basic Coverage Needs & Considerations:

• Builder’s Risk form dwelling coverage to protect the physical structure 

• Premises Liability coverage for injuries or damages that may occur on the property 

• DO NOT hire contractors or third-party workers that cannot prove they are licensed and insured 

Rent Phase (Landlord Insurance)

Once tenants are placed, coverage must transition to a landlord insurance policy (also called rental property insurance). This type of policy is specifically designed for tenant-occupied properties and reflects the ongoing liability and operational risks of long-term rentals.  

Basic Coverage Needs & Considerations:

• Dwelling coverage to protect the physical structure  

• Premises Liability coverage for injuries or damages that may occur on the property 
• Require tenants carry Renters Insurance and consider purchasing NREIG’s Tenant Protector Plan® to protect your loss history from tenant-caused losses 
• Consider adding Loss of Rents coverage to replace lost rental income if the property becomes uninhabitable  

Evaluating Your Insurance Options as A BRRRR Investor

Frequently Asked Questions

What do I need to know about vacant property insurance?

Vacant property insurance is essential when you have just purchased a new property, own a dwelling that is between tenants, or have a home listed for sale. The amount of coverage you need depends on lender requirements, your appetite for risk, and your exit strategy.  

Do I need a different insurance policy for each phase of BRRRR?

Yes. The Buy, Rehab, and Rent phases each involve varying risks and require different policy types to ensure proper protection and claim eligibility.  

How do I insure multiple BRRRR properties at different stages?

When you own multiple BRRRR properties, each one should be insured based on its current use and occupancy status. Properties in the Buy or Rehab phase typically need a vacant or renovation policy, while active tenant-occupied rentals require a landlord policy. National Real Estate Insurance Group ensures every property in your portfolio has the appropriate coverage as it moves from one stage to the next, all under one monthly schedule and bill.  

Next Steps for Investors

By aligning coverage with each phase of the BRRRR lifecycle, investors can reduce risk, avoid coverage gaps, and ensure long-term success. The BRRRR investing strategy relies on momentum, and your insurance coverage shouldn’t slow you down!  

Working with an insurance provider that understands your investing strategies and goals is essential. NREIG’s investor-focused program is built to support investment properties at any phase, helping you protect your assets and scale with confidence.