A standard homeowner's insurance policy generally isn't the right fit for a flip, because it's built around an owner-occupied home, not a vacant property under active renovation. Here are the categories of coverage flippers typically need to discuss with a licensed insurance agent, since specific requirements, exclusions, and minimum coverage amounts vary by insurer and state.
Builder's Risk (Course of Construction) Insurance
This is usually the core policy for a flip. It's designed specifically to cover a property while it's vacant and under renovation, including coverage for materials on-site and, depending on the policy, the structure itself against risks like fire, vandalism, and weather during the construction period. Standard homeowner's policies often specifically exclude or limit coverage on vacant properties, which is exactly the gap builder's risk is meant to fill.
General Liability Insurance
This covers claims if someone is injured on the property or if the work damages a neighboring property. If contractors, inspectors, or potential buyers are walking through an active job site, liability exposure is real, and this coverage is typically separate from the builder's risk policy that covers the physical structure.
Workers' Compensation
If you're directly employing labor (as opposed to hiring licensed, insured subcontractors who carry their own coverage), workers' comp requirements generally apply, and rules vary significantly by state. Even when hiring subcontractors, it's standard practice to verify their insurance and licensing directly rather than assuming they're covered.
Vacant Property Insurance
If a property sits vacant before renovation starts or between the end of renovation and closing, a dedicated vacant property policy may be needed to bridge that gap, since builder's risk policies are specifically tied to active construction and may not apply during a vacancy period with no work happening.
Title Insurance
Not property casualty insurance, but essential on both the purchase and the eventual sale — title insurance protects against claims arising from title defects, liens, or ownership disputes that a title search didn't catch. This matters even more on distressed acquisitions like foreclosures or tax sales.
Umbrella Liability Insurance
Some flippers, especially those doing multiple projects or higher-value properties, add an umbrella policy for additional liability protection beyond the limits of their underlying policies. Whether this makes sense depends on deal volume, property value, and overall risk exposure — a question for your insurance agent based on your specific situation.
Region-Specific Coverage
Depending on where the property is located, additional coverage like flood or earthquake insurance may be necessary and often isn't included in a standard builder's risk or liability policy by default. This is highly location-dependent and worth confirming directly with your agent for the specific property's location.
How to Actually Get This Set Up
- Work with an insurance agent who specifically has experience with builder's risk and investor policies — not every agent regularly writes this type of coverage.
- Get quotes before you close, since coverage needs to be in place from the day you take ownership, not after renovation starts.
- Confirm exactly what's excluded, not just what's included — vacancy periods, certain types of water damage, and specific perils are common places where gaps show up.
- Re-evaluate coverage if the project timeline or scope changes significantly from what you originally quoted.
Frequently Asked Questions
Can I just use my regular homeowner's insurance while flipping a house?
Generally not recommended, and in many cases a standard homeowner's policy won't actually pay out on a vacant property under renovation. Confirm with your specific insurer, but plan on a dedicated builder's risk or vacant property policy instead.
How much does flip insurance typically cost?
It varies by property value, location, project scope, and insurer, so there's no reliable universal figure to quote here. Get an actual quote for your specific property and project rather than budgeting off an estimate you found online.
Do I need separate insurance for each flip?
Often yes, since builder's risk policies are typically tied to a specific property and project timeline, though some insurers offer rolling or blanket policies for investors doing multiple projects. Ask your agent what's available for your volume.