Fix & flip insurance is a specialized type of insurance designed specifically for real estate investors who purchase properties with the intent to renovate and resell them. Unlike traditional homeowner’s insurance, which covers owner-occupied residences, fix & flip insurance policies address the unique risks associated with properties under renovation and the business activities involved in flipping homes.

Because these properties are often vacant during renovation, they are more vulnerable to theft, vandalism, and accidental damage. Additionally, contractors and subcontractors working on the property introduce liability concerns that standard homeowner policies typically do not cover. Fix & flip insurance is tailored to fill these gaps.

Why Standard Homeowner’s Insurance Isn’t Enough

Many new investors mistakenly assume that their existing homeowner’s insurance will protect their fix & flip projects. Unfortunately, that’s rarely the case. Traditional policies generally require the insured to live in the home or use it as a primary residence. Once the property becomes vacant or is used for business purposes, coverage often lapses or is significantly limited.

Moreover, homeowner’s insurance policies don’t cover the increased risks involved in renovation work, such as damage caused by contractors or materials theft. This leaves investors exposed to potentially devastating financial losses, making fix & flip insurance a critical investment.

In addition to protecting against theft and vandalism, fix & flip insurance can also cover the costs associated with delays in construction. Renovations can often take longer than anticipated due to unforeseen issues, such as structural problems or delays in obtaining permits. If a project runs over schedule, investors may face additional holding costs, including mortgage payments and property taxes. A comprehensive fix & flip insurance policy can help mitigate these financial burdens by providing coverage for lost rental income or other expenses incurred during the renovation period.

Furthermore, many fix & flip insurance policies offer liability coverage that protects investors from claims arising from accidents that occur on the property during the renovation process. This is particularly important, as injuries can happen, whether it’s a contractor slipping on a wet floor or a visitor tripping over construction materials. Having robust liability coverage ensures that investors are not left to shoulder the financial burden of legal fees or medical expenses resulting from such incidents, thus providing an additional layer of security in their investment strategy.

Fix & flip insurance policies can vary depending on the insurer and the investor’s specific needs, but they typically include several key types of coverage designed to protect the property and the business operations involved.

1. Property Damage Coverage

This coverage protects against physical damage to the property during the renovation period. It typically includes protection against fire, vandalism, theft, weather-related damage, and accidental damage caused by contractors or equipment. Since renovation sites are often more vulnerable than occupied homes, this coverage is essential. Additionally, it may also cover the costs associated with debris removal and cleanup after a covered loss, ensuring that investors can quickly resume work without incurring extra expenses.

2. Liability Coverage

Liability insurance protects the investor from legal claims arising from injuries or property damage that occur on the job site. For example, if a contractor or visitor is injured while on the property, liability coverage helps cover medical expenses and legal fees. This is particularly important as renovation sites can be hazardous environments. Furthermore, some policies may include coverage for completed operations, which protects against claims that arise after the project is finished, providing peace of mind long after the last nail is hammered in.

3. Builder’s Risk Insurance

Builder’s risk insurance is a specialized form of property insurance that covers buildings under construction or renovation. It often covers materials, fixtures, and equipment used in the project, whether they are on-site, in transit, or at temporary storage locations. This coverage is crucial for protecting the investment in materials and work in progress. In addition to standard coverage, some policies may also offer protection against loss of income due to delays caused by covered events, allowing investors to mitigate financial impacts during unforeseen circumstances.

4. Equipment and Tool Coverage

Many fix & flip investors use their own tools and equipment or rent machinery during renovations. This coverage protects against loss, theft, or damage to these valuable items, ensuring that work can continue without costly interruptions. Moreover, this type of coverage can extend to specialized tools that may be necessary for specific renovation tasks, such as high-end carpentry or plumbing equipment, which can be particularly expensive to replace.

5. Vacancy and Unoccupied Property Coverage

Since many fix & flip properties remain vacant for extended periods, this coverage addresses the increased risks associated with unoccupied homes. It often includes protection against vandalism, water damage from frozen pipes, and other issues that are more likely when a property is empty. Additionally, some policies may provide coverage for loss of rental income if the property is intended for leasing after renovations, ensuring that investors are not left financially vulnerable during the transition period.

Selecting the right insurance policy is critical to ensuring comprehensive protection without overpaying. Here are some important factors to consider when shopping for fix & flip insurance.

Assess Your Project’s Scope and Risks

Start by evaluating the scale of your renovation project. Are you flipping a small condo or a multi-unit property? Larger projects may require higher coverage limits and additional types of insurance. Consider the condition of the property, the neighborhood, and the length of the renovation timeline, as these factors influence risk levels. Additionally, think about the specific renovations you plan to undertake; for instance, if you’re adding significant structural changes or high-value upgrades, this could elevate your risk profile and necessitate more robust coverage.

Understand Coverage Limits and Exclusions

Insurance policies come with coverage limits and exclusions that can significantly impact your protection. Carefully review these details to ensure the policy covers all potential risks, including contractor-related damages, theft, and natural disasters common in your area. Some policies may exclude certain perils or require additional riders for full coverage. It’s also wise to inquire about coverage for materials on-site, as theft or damage to supplies can derail your project timeline and budget.

Compare Quotes from Multiple Providers

Insurance premiums for fix & flip projects can vary widely between providers. Obtaining quotes from several insurers allows you to compare coverage options, deductibles, and costs. Look for companies that specialize in real estate investment insurance, as they often offer more tailored policies and better customer support. Don’t hesitate to negotiate terms or ask about discounts for bundling insurance policies, as this can lead to significant savings over time.

Check the Insurer’s Reputation and Claims Process

Choosing an insurer with a strong reputation for customer service and efficient claims handling is crucial. Read reviews and ask for references from other fix & flip investors. A smooth claims process can save you time and stress if an incident occurs during your project. Furthermore, consider the insurer's financial stability; a company with solid financial ratings is more likely to honor claims promptly and effectively, providing peace of mind as you navigate the complexities of your renovation.

Evaluate Additional Coverage Options

Beyond the basic fix & flip insurance, you may want to explore additional coverage options that can further safeguard your investment. For instance, consider liability insurance to protect against potential injuries that could occur on the property during renovations. Moreover, if your project involves significant renovations that could lead to delays, business interruption insurance might be worth considering to cover lost income during the downtime. Understanding these additional options can help you create a comprehensive insurance strategy that aligns with your specific project needs.

Consult with an Insurance Agent

Finally, consulting with an experienced insurance agent who specializes in real estate investment can provide invaluable insights. They can help you navigate the complexities of different policies, clarify any confusing terms, and tailor a plan that meets your unique requirements. An agent can also keep you informed about any changes in the insurance landscape that might affect your coverage options, ensuring you remain adequately protected throughout your investment journey.

Understanding the typical risks involved in fix & flip projects highlights the importance of having the right insurance coverage. Here are some of the most common risks and how insurance can mitigate them.

Theft and Vandalism

Vacant homes are prime targets for thieves and vandals. Tools, materials, and even fixtures can be stolen or damaged, leading to costly delays and repairs. Property damage and builder’s risk insurance help cover these losses, allowing investors to replace stolen items and repair damage without depleting their own funds. Moreover, implementing security measures such as surveillance cameras and alarm systems can further deter criminal activity, but having comprehensive insurance ensures that even with precautions in place, investors are protected against potential financial losses.

Accidental Damage During Renovation

Renovations involve heavy equipment, power tools, and multiple contractors working simultaneously. Mistakes happen, such as accidental fires, water damage from burst pipes, or structural damage. Insurance policies that cover property damage and liability protect investors from bearing the full cost of these accidents. Additionally, it is crucial for investors to ensure that all contractors are properly insured and licensed, as this can help mitigate risks associated with their work and provide an extra layer of protection in case of mishaps.

Injuries on the Job Site

Construction sites can be hazardous. Injuries to contractors, subcontractors, or visitors can result in medical claims and lawsuits. Liability coverage helps cover medical expenses, legal fees, and settlements, shielding investors from potentially crippling financial exposure. Furthermore, implementing strict safety protocols and conducting regular safety training sessions can significantly reduce the likelihood of accidents, creating a safer work environment and potentially lowering insurance premiums over time.

Delays Due to Weather or Other Unforeseen Events

Severe weather, natural disasters, or other unforeseen events can halt renovation work, causing financial strain. Some fix & flip insurance policies include coverage for delays, helping investors manage ongoing expenses until work can resume. Additionally, having a contingency plan in place, such as securing alternative materials or adjusting timelines, can help investors navigate these challenges more effectively. Understanding local weather patterns and seasonal trends can also aid in planning renovations during more favorable conditions, reducing the risk of unexpected delays.

Investors should be aware of legal and regulatory factors that influence fix & flip insurance requirements and coverage.

Local Building Codes and Permits

Renovation projects must comply with local building codes and obtain necessary permits. Failure to do so can result in fines, delays, or voided insurance claims. Some policies require proof of compliance as a condition of coverage, so maintaining proper documentation is essential.

Contractor Licensing and Insurance

Hiring licensed and insured contractors is not only a best practice but often a requirement for insurance coverage. If an uninsured contractor causes damage or injury, the investor may face increased liability. Many insurers mandate that contractors carry their own liability and workers’ compensation insurance.

Disclosure Requirements



When selling a flipped property, investors must disclose any known defects or issues. Insurance claims related to undisclosed problems can be denied, and failure to disclose can lead to legal action. Maintaining transparency throughout the process protects both the investor and the buyer.

Insurance premiums can be a significant expense in a fix & flip project, but there are ways to manage and potentially reduce these costs without sacrificing coverage.

Improve Property Security

Installing security systems, motion-activated lighting, and sturdy locks can reduce the risk of theft and vandalism. Insurers often offer discounts for enhanced security measures.

Maintain a Safe Worksite

Implementing strict safety protocols and ensuring contractors follow best practices can minimize accidents and liability claims. A well-managed site may lead to lower premiums.

Bundle Insurance Policies

Some insurers offer discounts if you bundle fix & flip insurance with other policies, such as general business insurance or commercial auto insurance. This can provide comprehensive protection at a reduced cost.

Choose Appropriate Deductibles

Selecting a higher deductible can lower your premium, but be sure you can afford the out-of-pocket expense if a claim arises. Balancing deductible levels with your financial capacity is key.

To illustrate the importance of fix & flip insurance, consider these real-life scenarios where insurance coverage made a significant difference.

Case Study 1: Fire Damage During Renovation

An investor purchasing a mid-century home experienced a small electrical fire caused by faulty wiring during the renovation phase. Thanks to builder’s risk insurance, the investor was able to cover the repair costs and replace damaged materials without dipping into personal funds, allowing the project to continue on schedule.

Case Study 2: Liability Claim from a Contractor Injury

While working on a kitchen remodel, a subcontractor slipped and suffered a broken leg. The investor’s liability insurance covered the medical expenses and legal fees after the contractor filed a claim, preventing a costly lawsuit that could have jeopardized the entire project.

Case Study 3: Theft of Tools and Materials

A vacant property was broken into, and thousands of dollars worth of tools and materials were stolen. Equipment and builder’s risk coverage reimbursed the investor for the losses, enabling them to replace the stolen items quickly and avoid project delays.

Fix & flip insurance is a vital component of any successful home flipping business. It addresses the unique risks associated with renovating and reselling properties, providing peace of mind and financial protection. By understanding the types of coverage available, carefully selecting a policy, and implementing risk management strategies, investors can safeguard their projects and maximize their chances of profitability.

As the real estate market continues to evolve, staying informed about insurance options and maintaining compliance with legal requirements will help fix & flip investors thrive in a competitive landscape. Whether you’re a seasoned pro or just starting out, investing in the right fix & flip insurance policy is a smart move toward long-term success.