Fix-and-flip and BRRRR investors buy a property, leave it empty while it is renovated, and then rent it or sell it. Each of those stages carries a different risk, and the policy that fits one rarely fits the next. Most coverage problems for investors happen in the handoffs: a vacant house still on a homeowners form, a gut rehab with no builder’s risk, or a contractor with no workers’ compensation.
This guide walks through how investors in New York, New Jersey and Maryland typically insure a property from closing to lease-up or sale, the policy terms that cause the most trouble, and what to have ready before you call.
Short version: tell your producer the property's real status (vacant, under renovation, or leased) and your timeline before you close. Most denied claims on investment properties trace back to a policy written for a different use.
The three stages of insuring a flip or BRRRR property
| Stage | What the property is doing | Coverage commonly used |
|---|---|---|
| 1. Closing to start of work | Empty, waiting on permits or contractors | Vacant property (vacant dwelling) policy with premises liability |
| 2. Renovation | Under construction, materials on site | Builder’s risk or renovation coverage, plus liability; contractors carry their own insurance |
| 3. Lease-up or sale | Leased, listed for rent, or listed for sale | Landlord or dwelling fire policy once leased; vacant coverage while listed for sale |
The order matters less than the dates. Each change should take effect on the day the property’s status changes, not at the next renewal.
Stage 1: Vacant property insurance
Why a standard policy often falls short
Homeowners, dwelling fire and commercial property forms usually assume someone is using the building. Many of them include a vacancy clause. On the standard commercial property form, if a building has been vacant for more than 60 consecutive days before a loss, there is no coverage for:
- vandalism
- theft and attempted theft
- building glass breakage
- water damage
- sprinkler leakage (unless the system is protected against freezing)
Payment for other covered losses is reduced by 15 percent. Homeowners and dwelling forms vary, but many have similar restrictions, especially for vandalism and freezing.
For an investor, those excluded causes are often the most likely losses: a stripped copper line, a broken window, or a frozen pipe in a winterized-but-not-quite house.
Vacant vs. unoccupied
The two words are not interchangeable.
- Unoccupied generally means the property is furnished but no one is living there, such as a seasonal home between visits.
- Vacant generally means the building lacks the contents or activity needed for its normal use. On the commercial form, an owner’s building is vacant unless at least 31% of its square footage is rented to and used by tenants, used by the owner, or both.
A newly purchased, empty flip property is almost always vacant. Insure it that way.
What a vacant property policy usually includes
A vacant dwelling or vacant building policy is written for an empty structure. Depending on the carrier, it can include named-peril or broader property coverage, optional vandalism and theft coverage, and premises liability for injuries on the property. Coverage, deductibles and how long a carrier will write a vacant policy all vary.
Steps that help with pricing and claims:
- Winterize the plumbing, or keep the heat on and document it.
- Secure doors and windows, and use a monitored alarm if you can.
- Have someone inspect the property on a set schedule and keep a log.
- Keep the exterior maintained so it does not look abandoned.
Stage 2: Builder’s risk and renovation insurance
What builder’s risk covers
Builder’s risk insurance covers a building while it is under construction or renovation, along with the materials, fixtures and supplies for the project, often including materials stored on site or in transit. Depending on the policy, it can also add:
- coverage for the existing structure, which matters for a rehab because most of the value is the building you already own
- theft of building materials
- soft costs, such as extra interest or permit fees after a covered delay
Builder’s risk is written for the length of the project. If the job runs long, extend the policy before it expires.
Is a property under renovation still “vacant”?
The standard commercial property form says buildings under construction or renovation are not considered vacant. The form does not define those terms, though, and courts have reached different results. Planning a rehab, or doing very little work, may not count.
Do not rely on the renovation exception to cover a long gap. Tell your producer the property is under renovation, describe the scope of work, and get the coverage confirmed in writing.
Who buys builder’s risk: owner or contractor?
Either can, and the construction contract should say which. On most investor rehabs the owner buys it, because the owner’s lender and the owner’s equity are on the line. If your general contractor provides it, get a copy of the policy and confirm that you are covered as an insured.
Liability and contractors during the rehab
Premises liability
You can be sued for injuries on a property you own, even while it is empty or under construction. Contractors, inspectors, appraisers, buyers on a walkthrough and trespassers all create exposure. Keep liability coverage in force from closing to sale, and check that the limits meet your lender’s and any partner’s requirements.
What to collect from every contractor
Before anyone starts work, collect a certificate of insurance showing:
- General liability, with you (and each owning LLC) named as additional insured where your contract requires it
- Workers’ compensation, or proof of a legal exemption
- Commercial auto, if the contractor drives vehicles or equipment to the site
Put the insurance requirements in the contract, check the dates, and collect a new certificate when a policy renews. An uninsured subcontractor’s injury can end up as a claim against you.
State-by-state: what investors should raise with their producer
New York
- The Scaffold Law. New York Labor Law §240(1) places strict, non-delegable duties on owners and contractors to provide proper safety devices for work at height, such as scaffolds and ladders. Owners of one- and two-family dwellings who contract for work but do not direct or control it have an exemption, but courts have often found it does not protect owners who hold the property for purely commercial purposes, such as a flip or rental. Ask your attorney how it applies to you, and set your liability limits and contractor requirements accordingly.
- Workers' compensation proof for permits. Building permits in New York generally require proof of workers' compensation and disability benefits coverage, typically on forms such as C-105.2 or U-26.3 (workers' compensation) and DB-120.1 (disability). Collect the same proof from your contractors.
- Older buildings. Much of New York's housing stock is old. Carriers will ask about the age and condition of the roof, wiring, plumbing and heating, before and after the rehab.
New Jersey
- Contractor registration and insurance. Home improvement contractors working on residential property must register with the New Jersey Division of Consumer Affairs and carry commercial general liability insurance of at least $500,000 per occurrence. Check the registration and the certificate before work begins.
- Flood is usually excluded. Builder's risk and property policies generally exclude flood. For properties near the shore or in a flood zone, ask about separate flood coverage early, since new flood policies often have a waiting period.
- Selling vs. renting. A property held for resale and a property being prepared for tenants can need different coverage once the work ends. Tell your producer which exit you plan.
Maryland
- Licensed contractors. Home improvement contractors in Maryland must be licensed by the Maryland Home Improvement Commission (MHIC). Verify the license and collect a certificate of insurance before work starts.
- Lead rules for rentals. If you plan to rent a pre-1978 property after the rehab, Maryland's lead risk reduction law generally requires the unit to be registered with the Maryland Department of the Environment and to meet the required lead-risk reduction standard before a tenant moves in. Build this into your timeline, and keep the records; carriers may ask for them.
- Baltimore vacant properties. Baltimore City has a large stock of long-vacant row homes. Properties with a city vacant building notice, fire damage or long vacancy can narrow carrier options, so start the insurance conversation before you close.
Stage 3: Lease-up or sale
When the work is done, the property’s risk changes again.
- If you are renting it out, move to a landlord or dwelling fire policy written for a rental once the property is ready to lease or a tenant moves in. Add loss of rents coverage and make sure the lender is listed correctly, especially if you are refinancing in a BRRRR strategy.
- If you are selling it, keep the property insured until the sale closes. A finished house listed for sale is usually still vacant, so keep vacant coverage in place rather than letting the builder’s risk policy simply expire.
Common coverage gaps for investors
- A vacant house still insured on a homeowners or owner-occupied form
- A gut rehab with no builder's risk, or a builder's risk policy that does not cover the existing structure
- A builder's risk policy that expired before the project finished
- No liability coverage between closing and the start of work
- Contractors with no certificate on file, expired coverage, or no workers' compensation
- Policies naming the investor personally when the property is owned by an LLC
- Coverage that never switched to a landlord policy after the tenant moved in
What to have ready before you call
A complete file gets you to a quote faster and gives your producer more carriers to approach:
- Property address, year built, construction type, square footage and number of units
- Purchase price, closing date and owning entity (LLC name)
- Current condition and how long the property has been vacant
- Scope of work, budget and expected start and completion dates
- Contractor names, licenses or registrations, and certificates of insurance
- After-repair plan: rent, sell or refinance, with expected dates
- Lender insurance requirements, including mortgagee wording
- Security measures: alarm, locks, winterization, inspection schedule
- Prior losses on the property, if known, and your own claims history
Insuring a flip, rehab or BRRRR property?
Candor Insurance Brokerage Inc works with real estate investors across New York, New Jersey and Maryland. Send us the property and project details, and a licensed producer will review the vacancy, renovation and liability coverage it needs.
Or email Sara Glanz. You can also see what to gather on our vacant and renovation property page.
Frequently asked questions
Does a regular homeowners or landlord policy cover a vacant house?
Often only partly. Many homeowners, dwelling and commercial property policies restrict coverage once a building has been vacant for more than 60 consecutive days. Commonly, vandalism, theft, glass breakage, sprinkler leakage and water damage are no longer covered, and payment for other losses can be reduced. A property that will sit vacant should be written for that use.
What is the difference between vacant and unoccupied?
In general, unoccupied means furnished but no one is living there, while vacant means the building lacks the contents or activity needed for its normal use. Policies define these terms differently, so ask your producer how your policy defines them.
Do I need builder's risk insurance for a renovation?
If you are doing substantial work, usually yes. Builder's risk covers the building and the project's materials and supplies during construction or renovation. For a rehab it should be set up to cover the existing structure as well as the new work, and to run for the full length of the project.
Is a property under renovation considered vacant?
Many commercial property forms say a building under construction or renovation is not vacant, but the terms are often undefined and courts have reached different results. Do not rely on it. Tell your producer the property is under renovation and get the coverage confirmed in writing.
Do I still need liability insurance on a vacant property?
Yes. Contractors, inspectors, buyers, neighbors and trespassers can all be hurt on a vacant or rehab property. Vacant property and renovation programs typically pair property coverage with premises liability.
What insurance should my contractor carry?
At minimum, general liability and workers' compensation, shown on a current certificate of insurance. Where your contract requires it, ask to be named as additional insured. In New Jersey, registered home improvement contractors must carry at least $500,000 per occurrence in commercial general liability.
When should I switch to a landlord policy?
When the work is finished and the property is ready to lease or is leased. If you are selling instead, keep the property insured until the sale closes. Give your producer the expected dates at the start so the change happens on the right day.
This guide is general information, not coverage or legal advice. Policy terms, definitions and carrier requirements vary. Coverage is subject to underwriting and the actual policy language, and a licensed insurance professional should review your situation.