Fix and Flip Insurance Requirements: What Every Investor Should Know
- Jan 12
- 2 min read
If you’re buying a property with the intent to renovate and resell, insurance isn’t optional—it’s a requirement. Whether mandated by lenders or needed to protect your capital, understanding fix and flip insurance requirements can prevent costly delays and uncovered losses.
This guide breaks down what every investor needs to know before starting a rehab project.
1. Insurance Is Often Required Before Closing
Most fix and flip investors use hard money or private lenders, and nearly all require proof of insurance before funding.
Typical lender requirements include:
Active fix and flip or builder’s risk insurance
Property coverage matching the loan amount
Lender listed as loss payee or mortgagee
Without meeting these requirements, closings can be delayed or canceled.
2. Vacant Property Coverage Is Critical
Fix and flip properties are often vacant—sometimes for extended periods.
Standard homeowners policies usually exclude or limit coverage for vacant properties, which is why specialized fix and flip insurance is required.
3. Minimum Property Coverage Limits
Insurance carriers and lenders typically require coverage based on:
Replacement cost of the structure
Completed value after renovations
Materials stored onsite or in transit
Underinsuring the property can result in coinsurance penalties or partial claim payments.
4. Liability Coverage Requirements
Liability exposure increases significantly during renovations.
Most fix and flip insurance policies include:
Premises liability coverage
Legal defense costs
Protection against injury claims from visitors or third parties
However, this coverage does not replace contractor insurance.
The U.S. Department of Labor highlights why contractors should carry their own workers’ compensation insurance.
5. Contractor Insurance Verification Is Essential
Investors are typically required—or strongly advised—to:
Collect certificates of insurance (COIs)
Verify contractor general liability coverage
Confirm active workers’ compensation policies
Failing to do so may shift liability onto the property owner.
6. Policy Term Must Match the Project Timeline
Fix and flip insurance is usually written for:
3, 6, 9, or 12 months
If renovations exceed the policy term and coverage expires, claims may be denied.
Always extend coverage before expiration if your project runs long.
7. Required Endorsements May Apply
Depending on location and lender guidelines, additional coverage may be required, such as:
Flood insurance
Wind or hurricane coverage
Ordinance and law coverage
The FEMA Flood Map Service Center can help determine if your property is in a flood zone.
Common Mistakes Investors Make
Relying on homeowners insurance
Failing to insure vacant properties
Underestimating liability exposure
Letting policies expire mid-project
These mistakes often surface only after a loss occurs.
How Wexford Insurance Helps Investors Meet Requirements
At Wexford Insurance, we specialize in fix and flip insurance nationwide and help investors:
Meet lender and underwriting requirements
Secure coverage quickly before closing
Customize policies based on project scope
Avoid costly coverage gaps
👉 Request a fix and flip insurance quote from Wexford Insurance today and ensure your rehab project meets all insurance requirements from day one.
