House Flipping Business Insurance
Getting insurance for a house flipping business is essential; house flipping businesses need to be protected from a variety of different risks (i.e., property damage claims.).
Other risks include a renovation worker getting injured while contracted to work in one of your properties, land law-related disputes, and contract law infringements between yourself and a tenant or a potential buyer.
We’ll help you find the most personalized and affordable coverage for your unique business.
Recommended: Next Insurance is dedicated to matching small businesses with the right policy at the best price.
Best Insurance for a House Flipping Business
General liability insurance is — generally speaking — one of the most important insurance policies for house flipping businesses.
Some of the risks general liability insurance covers are:
- Bodily injury
- Property damage
- Medical payments
- Legal defense and judgment
- Personal and advertising injury
Keep in mind that a general liability policy is a good place to start, but might not be enough to adequately cover every house flipping business, and you will thus need to find the right personalized coverage in order to ensure that you are properly protected.
Examples of additional coverage policies that may be useful for you as a house flipping business owner include:
- Dwelling policy: This will cover costs that arise as a result of physical damage to a commercial property (e.g., during a cosmetic renovation).
- Builders risk insurance: This is insurance that safeguards a variety of costs that relate to property development (e.g., labor costs, construction materials, heating equipment, temporary structures, etc.).
- Commercial umbrella policy: This safeguards the types of risk that are covered by your general liability insurance, but to a greater extent.
You can go about getting your house flipping business’s insurance in two different ways:
- Through traditional brick and mortar insurers that have been operating in the US for several decades. You will need to talk to an insurance agent in order to get started.
- Through online insurers; these offer customizable coverage at a more affordable rate due to having lower overhead.
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Cost of General Liability Insurance
The average house flipping business in America spends between $500-$1,500 per year for $1 million in general liability coverage.
Compare the average cost of general liability insurance for a house flipping business to other professional industries using the graph below.
Several factors will determine the price of your policy. These include your:
- Location
- Deductible
- Number of employees
- Per-occurrence limit
- General aggregate limit
You may be able to acquire general liability insurance at a discounted rate by purchasing it as part of a business owner’s policy (BOP) rather than as a standalone policy.
A BOP is a more comprehensive solution that includes multiple forms of coverage, such as business interruption and property insurance.
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Common Situations That General Liability Insurance May Cover for a House Flipping Business
Example 1: You are visiting the home of a seller to view the property before you decide to buy it or not. While walking through the property, you accidentally trip over the seller’s dog and fall into the china cabinet, knocking it over and smashing most of the pieces inside. Your general liability insurance covers damage caused by your business to other’s property, so you should be able to file a claim and get help with replacement costs.
Example 2: A potential investor is visiting your office to talk to you about an upcoming development. She is walking down your steps to leave when the railing breaks off. She falls off the steps and breaks her arm. She asks that you pay for her medical treatment. Your general liability insurance policy will likely cover this cost.
Example 3: One of your competitors is claiming that you have libeled him with your latest marketing campaign. The general liability insurance you carry will pay for your legal fees, including the cost of a settlement if you settle out of court.
Other Types of Coverage House Flipping Businesses Need
While general liability is the most important type of insurance to have, there are several other forms of coverage you should be aware of. Below are some of the most common types of coverage:
Commercial Property Insurance
All of the equipment and supplies you use to renovate and flip houses took a considerable investment to acquire. If you were to lose most or all of your commercial property in an event like a fire, you might struggle financially to replace it. With commercial property insurance, you can file a claim with your insurer to get financial help with replacement costs as long as the damage was caused by a covered event.
Commercial Auto Insurance
If you have a car or truck that you use primarily for business, you need commercial auto insurance. A commercial auto insurance policy will ensure that you meet the insurance requirements of your state. It will also protect your business from liability. If you or an employee causes an accident, the insurance policy will pay for vehicle repairs, medical treatment, and legal fees if there is a lawsuit.
Commercial Umbrella Insurance
A commercial umbrella insurance policy will protect your business if you are in a situation where your general liability insurance policy limits are exceeded—like if you lose an expensive lawsuit. Once the limits of your general liability insurance are reached, the umbrella policy will continue to pay until its own limit is reached.
Home-Based Business Insurance
If your house flipping business is based out of your home, there is a chance that your homeowner’s insurance will not cover accidents resulting from business activities. You will need to discuss your coverage with your homeowner’s insurance provider to determine what is covered and what is not. You may be able to get a home-based business insurance policy added to your existing homeowner’s policy, or you may need to get a separate policy.
Additional Steps To Protect Your Business
Although it’s easy (and essential) to invest in business insurance, it shouldn’t be your only defense.
Here are several things you can do to better protect your house flipping business:
- Use legally robust contracts and other business documents. (We offer free templates for some of the most common legal forms.)
- Set up an LLC or corporation to protect your personal assets. (Visit our step-by-step guides to learn how to form an LLC or corporation in your state.)
- Stay up to date with business licensing.
- Maintain your corporate veil.
House Flipping Business Insurance FAQ
Yes, absolutely. You will need to first get a quote from an online business insurance provider like Next Insurance. Next allows you to then purchase a policy immediately and your coverage will be active within 48 hours.
A typical business owner’s policy includes general liability, business interruption, and commercial property insurance. However, BOPs are often customizable, so your agent may recommend adding professional liability, commercial auto, or other types of coverage to your package depending on your company’s needs.
"Business insurance" is a generic term used to describe many different types of coverage a business may need. General liability insurance, on the other hand, is a specific type of coverage that business owners need to protect their assets.
Yes you do.
Getting the right business insurance coverage before you get started can allow you to operate safely without needing to worry about claims or liability that could arise in the future.
Such disputes could result from contractor injuries or from damage to commercial property and/or buildings.
Not necessarily. Certain exceptions may be written directly into your house flipping business insurance policy, and some perils may be entirely uninsurable.
Yes, an LLC is meant to create a legal barrier between your business and your personal assets and credit. If you haven’t formed an LLC yet, use our Form an LLC guide to get started.
An LLC doesn’t protect your business assets from lawsuits and liability– that’s where business insurance comes in. Business insurance helps protect your business from liability and risk.