Builder's risk insurance is the primary coverage for properties under active renovation. It covers damage during construction — fire, theft, vandalism, storm damage, and collapse. Standard homeowners insurance explicitly excludes vacant properties under renovation. Cost: $800–$2,000 per year or $100–$200 per month for a typical flip. Required by virtually all hard money lenders as a condition of the loan.
Between acquisition and the start of renovation, and again between completion and closing, your property may be vacant and not technically under construction. Vacant property policies cover this gap. Many builder's risk policies cover vacancy periods — confirm with your carrier. Do not assume your coverage is continuous without verifying the specific policy terms.
Anyone who enters your property — contractors, inspectors, potential buyers, neighbors — can sue you if they are injured. General liability coverage of $1M+ protects you against these claims. Your builder's risk policy may include general liability — verify the limit. If it does not, add a separate GL policy. The cost is minimal; the exposure without it is not.
Require every contractor who works on your properties to carry their own general liability (minimum $1M) and workers compensation insurance. Get certificates of insurance before any contractor starts work. A contractor who injures themselves or their employee on your site may sue you if they lack their own coverage. This is a non-negotiable requirement on every flip.
Dan White is a licensed Virginia real estate agent at Pearson Smith Realty and founder of FreeDealCalc.com. He has been investing in Northern Virginia real estate for 20+ years.