What Insurance to purchase for a rental property?
If the owner insures a rental property with an HO-3, but lives elsewhere, it’s a bad fit; you risk NOT being covered for losses.
Dwelling Policy 3 is a policy used to insure private dwelling residential property. Occupancy could include a homeowner who doesn’t qualify for an HO-3 or HO-5 policy, or if the property is being rented to tenants. A DP-3 is not designed for vacant properties.
The dwelling is insured under a replacement cost basis. DP-3’s vary company to company. Most companies include other structures coverage, of 10 percent of what the dwelling is insured for. Other coverages that can be endorsed and added to the policy include personal property, personal property full replacement cost, extended dwelling coverage, loss of use, law and ordinance, sewer back up, liability, medical payments and more.
What Insurance to purchase and have during rehab?
The Builder’s Risk policy (also known as a Course of Construction policy) is a property policy that insures against accidental loss or damage to contractors’ work and property during the period of construction. It usually extends coverage to equipment, materials, and supplies to be used and incorporated into the project. Since construction projects adhere to strict schedules, both owners and contractors want to avoid delays due to a claim. The Builder’s Risk policy was created to ensure a quick resolution if a property claim occurs on a construction project. It covers the project and can include the owner, general contractor, and subcontractors as Named Insureds, thus avoiding the “finger pointing” between parties regarding responsibility for the loss, resultant delays, and payment for damages. The builders risk policy will provide coverage for damage done to the insured structure from a wide variety of events.