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Builder’s Risk—Insurance for New Builds and Renovations

by Posted in Homeowners Insurance, Investor Insuance Tagged , ,

In this tough real estate market, you’re excited that you found an older home to completely renovate before moving in. It’s going well—then you get the phone call. A fire burned the structure to the ground. Now what? Did you have the right insurance policy to cover your losses?

When you’re building a new home, or renovating an existing one, you need a specialized kind of insurance coverage. A standard homeowners policy (HO-3) will not cover homes while they’re being built, or in the case above, while they’re being renovated. You need a builder’s risk policy to protect your financial investment during the construction process.

What is builder’s risk insurance?

Builder’s risk insurance protects a home from property damage and loss while it’s being built. This can be new construction from the ground up, or coverage for a major renovation project. Builder’s risk is a valuable coverage for both property investors and private homeowners, and it can cover either residential or commercial properties.

Most builder’s risk policies cover damage to the building itself and/or the construction materials on site from perils such as:

  • Theft
  • Vandalism
  • Fire
  • Explosion
  • Lightning
  • Wind and hail

Builder’s risk policy premiums are calculated using several factors, including location of property, type of project, type of construction, and the estimated date of completion. The property will typically be insured based on the estimated cost to rebuild the completed home. An experienced insurance agent, like those at L & M Insurance Group, can help you figure out the coverage limits and deductibles best for you.

Since there is always some uncertainty surrounding construction timelines, especially now with supply chain and labor shortages, builder’s risk policies offer flexible policy term lengths. Many builder’s risk policies are written for nine months to a year, and can be rewritten if construction is delayed. We also can write policies for as short a time as one month if the project is a short-term one.

Don’t forget liability coverage

A construction site can be a dangerous place. What about liability coverage? Builder’s risk policies do not provide liability coverage for claims that happen during the construction period—for example, if someone is injured while on the property. Be sure to ask your L & M Insurance Group agent to explain your options for protecting your liability in this situation.

Choose L & M Insurance Group for your builder’s risk needs

L & M Insurance Group has years of experience working with individual homeowners as well as property investors in organizations like SREIA (Suncoast Real Estate Investors Association), TBREIA (Tampa Bay Real Estate Investors Association), Sarasota REIA, and GOREIA (Greater Orlando Real Estate Investors Association). If you would like more information about builder’s risk policies, or if you’d like a quote, please call us at 813-672-4100, or click here to contact us online. We understand the insurance needs of property investors as well as private individuals, and would love to help you with all your insurance needs.

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Protect Your Vacant Investment Properties

by Posted in Commercial Insurance, Investor Insuance, News Tagged , , ,

Property investors who own rental properties, or who buy, renovate and resell homes, may occasionally find they have vacant properties on their hands. If your property is vacant, it could be a magnet for trouble, attracting thieves, vandals, squatters, even neighborhood kids looking for a place to hang out. Here are seven steps to take to protect your vacant investment properties:

1. Secure the property

Make it hard to get in by ensuring doors and windows have sturdy locks, and keep them locked! If a tenant has recently moved out, have the locks changed or re-keyed. You may also consider reinforcing exterior doors with metal doorjamb or hinge shields in case someone tries to kick down the door.

2. Monitor and maintain the exterior

Check on your vacant property frequently to make sure it’s secure. Keep landscaping tidy by pruning shrubs and keeping lawns mowed. Make sure plants and trees don’t provide hiding spots or cover for thieves or vandals. Remove any mail or newspapers that arrive—nothing says no one is home more quickly than a stack of newspapers in a driveway or an overflowing mailbox.

To guard against fire, remove any flammable debris around the structure, including construction materials, dead vegetation, paper, cardboard, and so on.

3. Light the property at night

To deter thieves and vandals, make sure your property has working exterior lighting, either on a motion sensor or a timer. In addition, have a few lights on timers inside the property to help it make it look like someone is there. These simple measures can make a casual thief or vandal think the property is occupied.

4. Set up an alarm system

In some cases, you may want to set up security cameras or an alarm system to protect your investment property. Even if you don’t have an alarm system, simply placing a sign or sticker saying you do may help to deter thieves.

5. Make friends with the neighbors

If possible, become friendly with the neighbors near your property. They can act as an extra set of eyes and ears when you’re not around. Give them contact information, yours or your property manager’s, to call regarding any suspicious activity.

6. Advertise wisely

While you want potential buyers or renters to know your property is available, you should be careful about how you share information. Don’t share too much with people calling or inquiring online. Some professional thieves locate vacant properties to hit this way. You’ll probably want to leave a For Sale sign up, but you might consider whether leaving a For Rent sign at your vacant property may attract unwanted attention.

7. Carry insurance

Vacant properties and properties being renovated still need insurance coverage, to protect the structures themselves, and your liability as a property owner. You may need a builder’s risk policy that provides coverage for damage to the insured structure and liability coverage during renovation. Or perhaps you need a vacant dwelling policy, which covers properties that do not meet the requirements for a builder’s risk policy, properties that are between tenants, or those waiting for a buyer. If you have any questions about what type of insurance you need…

We can help!

The agents at L & M Insurance Group have years of experience working with property investors, and we’re familiar with the insurance requirements of properties purchased in the name of an entity such as a land trust, LLC, or corporation. We are proud to partner with companies that also understand your needs—like REInsurePro, an insurance program specifically designed with real estate investors in mind.

Please allow us to help you with all your insurance needs including protecting your vacant property. You may reach us by phone (813-672-4100) or contact us online by clicking here. For more than 30 years, L & M Insurance Group has been serving the personal and commercial insurance needs of Riverview, Brandon, Tampa, Apollo Beach, Gibsonton and surrounding communities.

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Insurance for Real Estate Investors

by Posted in Investor Insuance Tagged , , , , , Leave a comment

What Kind of Insurance do you need as a Real Estate Investor and other Insurance Help to protect your real estate investment

As a real estate investor, you have specialized needs when it comes to insuring investment properties. You may have multiple properties, some of which may be vacant. And those properties may be titled in the name of an individual, an LLC, a corporation, or a land trust. Insurance for real estate investors is different than insurance for home owners. You may have questions about which type of policy to buy, and what it covers.

L & M Insurance Group has extensive experience helping real estate investors with their unique insurance needs. On March 3, L & M’s president, Mark Holley, along with colleague Larry Johnson, made a presentation to the general meeting of the Suncoast Real Estate Investors Association (SREIA) covering several points of interest to real estate investors. Here is some key information from the presentation:

DP3 vs. DP1 policies

The DP3 and DP1 policies are two types of tenant-occupied policies that real estate investors should consider. Typically, the DP1 form only covers named perils that are listed on the policy, including fire, smoke, wind, hail, lightning, explosion, and so on. DP3 policies cover all perils except those that are specifically excluded in the policy documents. Basically, the DP3 form is for property owners who want a tenant-occupied policy with all the bells and whistles. If you need to save money, or are interested in assuming more risk yourself, choose the DP1 form. Be sure to talk to your agent about what is included and what isn’t, so you can get the policy you need.

Builder’s risk vs. vacant dwelling

Builder’s risk provides insurance coverage for either residential or commercial buildings under construction or renovation. Vacant dwelling covers a dwelling that is unoccupied.

One thing to remember is that the liability coverage included on a builder’s risk policy doesn’t cover exposure to claims related to renovation, so the people you hire should carry general liability and list you on their policy as an additional insured.

4 point inspections and wind mitigation reports

If you own a home or rental property older than 30-40 years, a homeowners company may require a 4 point inspection before they’ll sell you a policy. A 4 point inspection looks at the four main systems of the property: the roof, the plumbing system, the HVAC system, and the electrical system. These inspections generally cost between $75-$100, and are good for three years. If the inspection reveals something unacceptable to the underwriting rules of the insurance company, they may decline to cover you. You may then choose to fix the problem(s), or try another insurance company. Your independent L & M Insurance Group agent can help you determine which company will be most likely to cover your property.

Even if the insurance company will write the policy, certain things will cause premiums to be higher, including aluminum wiring, an old or patched roof, and plumbing or heating/cooling systems that have not been kept updated.

Wind mitigation reports tell us about your roof, and what credits can be applied to your policy. The inspector will examine and report on your roof’s covering, roof deck and roof wall attachment, roof geometry (hip, flat, or other), secondary water resistance, and opening protection.

In addition to certain physical features that cause your premiums to be higher, certain situations may also increase the cost of your insurance. These include lapses in coverage, short-term rentals, and property being held in a land trust or a land trust with multiple entities.

Our partnership with you

L & M Insurance Group’s goal is to write your real estate investment insurance policy for the best price with a company that will pay your claim if you have one. That’s one of the reasons we need full and accurate information about your properties when we’re quoting your policy. You can help us by answering our questions truthfully and fully. We have markets that will write almost any kind of situation, but we need to know certain details in order to place your policy with a company that is right for you.

Have questions? Please give us a call at 813-672-4100, and let L & M Insurance Group help you protect your real estate investments. 

Are you sheltering in place due to the COVID-19 coronavirus? We can serve your insurance needs without seeing you in person! Please call us at 813-672-4100 or email us by clicking here if you need an insurance quote, have to make a claim, or have any questions about your insurance needs. We also have a live chat feature on our website.

Our office is temporarily closed to the public in order for us to follow social distancing guidelines and protect the health of our employees and customers. If you need to make a cash payment, please call our office at 813-672-4100 for instructions.

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Builder’s Risk Policy Basics

by Posted in Investor Insuance, Uncategorized Tagged , , Leave a comment

There are some instances when a standard homeowners insurance policy won’t cover your property, such as when you’re building a home from the ground up, or you own a vacant property undergoing renovations. What happens if your property burns to the ground, or incurs another type of serious damage or loss? To protect your under-construction or renovation properties, you’ll need a builder’s risk policy.

What is a builder’s risk policy?

A builder’s risk policy provides insurance coverage for either residential or commercial buildings under construction or renovation. If you’re a homeowner, property investor, builder, or contractor building or remodeling a building, this is the policy you’ll need to protect your financial interest. You can purchase a policy for as short a term as one month, all the way up to a year, depending on how long you think the construction process will take. If the project doesn’t finish in the expected time, you can extend coverage. You can also cancel the policy if the building is finished before the end of the policy term.

Depending on what perils you choose to include, builder’s risk policies cover loss or damage at construction sites, including building materials being used to remodel or complete ground-up construction of a building. You can buy a builder’s risk policy with varying deductibles and levels of coverage—your L & M Insurance Group agent can help you decide what policy features are best for you.

What builder’s risk doesn’t cover

Builder’s risk policies do not typically cover liability for accidents or injuries on the construction site that are related to the construction itself. Also, a builder’s risk policy is different from a vacant dwelling policy, which is just what it sounds like: a policy that covers your home or investment property when it is vacant, but not under construction.

L & M Insurance Group has many years of experience helping clients in Brandon, Riverview, Valrico, Gibsonton and surrounding areas choose the right insurance coverage to protect their financial interests. We understand the insurance needs of property investors as well as private individuals, and would love to help you with all your property insurance needs. Please contact us via phone at 813-672-4100 or click here to email us.

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Property Investors: Do You Have the Right Insurance?

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As a property investor, your insurance needs are more complex than the average homeowner. Some insurance agencies are unfamiliar with the requirements of investment properties, particularly ones purchased in the name of an entity such as a land trust, LLC, or a corporation. At L & M Insurance Group, we have a lot of experience working with property investors and others with complex real estate insurance needs.

Types of Investment Property Insurance

Whether you intend to buy an investment property and flip it, or install a tenant, we represent many companies who are happy to insure your investment property. These companies offer a variety of policies tailored to the needs of property investors, including:

 

DP3 Dwelling Fire—Dwelling Fire policies provide coverage for residential buildings that are not owner occupied, but are usually rented to others. The most popular version of this policy is called a DP3. It provides coverage for the building’s structure from all perils except those specifically excluded in the policy, as well as personal liability and loss of use. It is also a replacement cost policy, and we consider it one of the best non-owner occupied policies on the market.

Builder’s Risk—This policy provides coverage for damage to the insured structure and liability coverage during a renovation period. We can write these policies in terms of two, three, four, five, six, or 12 months. Renovations need to improve the property by 50 percent of its value to qualify for a Builder’s Risk policy, so if your property renovations are only cosmetic, you may insure your property with a Vacant Dwelling policy (see below).

 

Vacant Dwelling—In addition to being appropriate for a property that doesn’t qualify for a Builder’s Risk policy, Vacant Dwelling also provides coverage for property investors who own rental property and are between tenants or are trying to sell a property no one lives in.

 

Ready to insure your Property

So whether you’re a property investor who buys and flips homes or one who rents to tenants, we’ve got you covered, even during the renovation process. Please call L & M Insurance Group at 813-672-4100 or email us if you’d like to know more about how we can help you protect your investments. For more than 30 years, L & M Insurance Group has helped customers within Riverview, Brandon, Gibsonton, Apollo Beach and the Tampa Bay area.

Why You May Need a Vacant Dwelling or Builder’s Risk Policy

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Insurance Policies to Protect your Vacant Dwelling in Brandon, Tampa, Riverview and Surrounding Florida

Vacant Dwelling Builder's Risk Policy Brandon, Tampa FloridaEmpty buildings or buildings under construction or renovation present some unique concerns. An empty home or other building can be a magnet for vandalism, and if someone isn’t living there, a small leak could easily become a big flood. Empty buildings are just as likely to be affected by fire, wind, or lightning. Standard homeowner’s or commercial insurance policies may not cover you if the insured building is vacant. Certain remodeling projects, and residential and commercial construction jobs require specialized insurance policies. At L & M Insurance Group, we have the experience and knowledge to help you with your unique needs.

Here are two types of policies that might apply to your situation:

A vacant dwelling policy covers your home if it is left vacant for a certain length of time, usually at least 60 days.

A Builder’s Risk policy covers a building under construction. It can cover just the building itself, or also the materials at the job site for use in construction of the building. Coverage limits should be for the completed value of the structure, less the value of the land. The policy can be written for as short a term as one month all the way up to 6 months or a year. The policy can also be extended if construction is not finished in time, or be cancelled if the building is finished before the end of the policy term.

Let’s look at some scenarios in which you should have a vacant dwelling or builder’s risk policy:

Vacant dwelling

  • You’ve bought a home, but for some reason you can’t move in yet—you haven’t sold your old home, or, conversely, you’ve moved to your new home and need an insurance policy to cover your previous home until it sells.
  • You own a commercial building or rental property that currently has no tenant.

Builder’s risk

  • You bought a home as investment, intending to have renovations done before selling it, and it will remain vacant until you sell.
  • You’re building a home from the ground up.
  • You bought a bank-owned home you’re renovating before you move in.

Unlike many agencies, at L & M Insurance Group, we have a lot of experience working with property investors and others with complex real estate insurance needs. We understand and are familiar with the situations that require these types of policies. Please contact us so we can tailor the right policy for your unique builder’s risk or vacant dwelling needs in Tampa, Brandon, Riverview and all of Florida.