Vacants, Flood, & Builders Risk Insurance

Vacant Property Insurance

If you own a property that is not occupied, you should consider insuring it under a vacant property form. If you do not insure the property under a vacant property insurance policy, the other policy will have restrictions and limitations under the vacancy provisions of the insurance policy. When referring to the ‘other’ policy we are referring to the regular type of insurance you would buy for a commercial building or a personal structure like a home or vacation property. The standard type of policies may have exclusions for water damage if the structure is unoccupied for 30+ days. Other carriers will significantly increase the deductibles, which we have seen to be upwards of $50,000. Just make sure you are well informed about the coverage you are purchasing. As you know, vacant property insurance is more expensive than the standard types, so get your value out of the transaction and as your insurance agent as many questions as you can.

Many times vacant buildings or vacant homes will need to be insured as they pass from generation to generation, and the Trust needs the property insured for many reasons. Sometimes homes and commercial properties need significant renovation prior to move-in.

Maybe you are not sure what to do with the property, but you own it and its vacant and you have it insured with a standard carrier that may not know that it may be vacant.

No matter what, make sure you review the quote/policy to understand how the coverage applies when there is a water leak. Ask questions about vacant property insurance and ask for one option with every available coverage, and one option that is normal and customary for a similar peer group’s choices in terms of coverage. Better yet, maybe you could even get a quote from a few different companies, 2 quotes from each of them, one that has all the goods, and one that is just SOP.

There are so many considerations to make with vacant property insurance, but make sure that you double check whether the coverage is for replacement cost or actual cash value. Also see whether it covers vandalism and malicious mischief. And while you are at it, see if your agent can provide coverage on an all peril basis with no water exclusions.  See more information about Vacant Home Insurance and Vacant Property Insurance Policies.

Flood Insurance

Properties zoned in a flood zone are able to purchase flood insurance through the National Flood Insurance Program. Many private insurance carriers have offered the ability to access the NFIP through various methods in order to streamline the process of purchasing coverage. If a bank is requiring you to carry Flood Insurance, its important you get all of the facts regarding the cost/coverage well in advance of signing any bank papers. Flood Insurance can be a significant cost that could easily affect the affordability of a property.

Our agency offers free flood determinations and flood insurance quotes for those that ask. Usually we can determine if your property is in a flood zone within a few minutes, but if your geographic location has not been recently ‘mapped’ by the NFIP, it could take a few days.

If your property (residential or commercial) is not in a designated flood zone you may be able to purchase flood insurance with preferred pricing directly through a private insurance company without needing the National Flood Insurance Program.

Flood Insurance Requirements for Banks – If you are interested in purchasing a property, and that property happens to be in a flood zone, you will be required to carry flood insurance. Bear in mind that if the building (home or commercial structure) is in a flood zone, the pricing could be in the range of $1,000 to $2,000 per $100,000 in building/property based coverages. Such a premium could drastically impact how you approach the process of buying, or walking away, from that deal.

An option to reduce flood insurance premiums is to purchase an elevation certificate. Though sometimes elevation certificates may be required to even purchase flood insurance.

We are licensed in many states, so give us a call and let’s see if we can help!

Click Here to Learn More About Flood Insurance 

Renovations, New Builds, & Builders Risk

So many different scenarios can funnel into builders risk based insurance programs. Renovating homes and buildings or building brand new commercial or personal structures, we suggest a policy program that provides specific coverages for a Specific amount of time. Another way to remember this kind of coverage is to call it ‘course of construction insurance.’ We like to use terms that are clear and unambiguous 🙂

The reason why this coverage type, or policy form, is important is because the other policy types you may choose will exclude the coverages held most dear during the building process. General Contractors usually need builders risk at some point, but home owners building a new home may find it prudent to determine how their builder is insuring the construction process. Builders risk based insurance can cover the items waiting to be installed, otherwise known as the building materials. Builders Risk insurance can also cover other equipment related to the site development. Think about the issues you may encounter if you had a fire at the site that was being renovated:
  • Building materials sitting out in the open, being damaged by the elements while the building sits damaged.
  • Needing to continue to pay real estate taxes, even while the building sits damaged.
  • Due to the fire, the general contractor needs to change future work, causing a loss of income. This coverage typically needs endorsed, or added onto the policy.
  • Your tenants can’t move in and you have lost rental income as a result.
For the larger projects, contractors or property owners can purchase OCIP policies or WRAP-UP type plans. As a sidenote, if the general contractor purchases this type of insurance, it is called a Contractor Controlled Insurance Program. What is really interesting about these programs is that the owner has complete control over the insurance covering the workers and subcontractors throughout the term of the project.

About Us

At Kelly Insurance Group, we get insurance issued for those that need our help and respect our expertise, no exceptions.