Be Aware of the Dangers and How to Protect your Investments

How To Do Home Builders Insurance for Property Developers and Individuals

I'm moving a house, what kind of insurance do I need?
The opportunity to make a return on investment in the housing market today has increased the activity of real estate investments in the residential market. We are often asked to secure these projects. Here is a brief explanation of the risks and some methods of protecting your investment.

Script:

John Doe is buying a 1,500-square-foot home bank for $ 50,000. His plan is to invest $ 40,000 to complete the house and sell it for $ 90 per square foot to $ 135,000 with a potential gross profit of $ 45,000. The property is owned by John Doe Investments, LLC. John has a couple of part-time people helping with cleaning, demolition, landscaping, etc. Most of the work is subbed out.

Common Risks:

Damage to its structure by fire, wind, flood, earthquake, etc.

· Theft of building materials

· Injury to visitors, potential buyers, real estate agents and subcontractors, etc.

Damage to property above, property of neighbors, etc.

· Injury to employees who work for you.

Common Risk Management Techniques:

Transfer of risk:

Use subcontractors in the realization of home improvement; Electrical, HVAC, roofing, etc. Be sure to obtain a Certificate of Insurance that demonstrates the appropriate limits of liability and Workers' Compensation. Always obtain the certificate directly from the insurance agency of the subs and always before starting the work.

Risk Financing:
Property Coverage: A Construction Risk Policy covers the project during the construction phase and protects the investor from losses due to fire, wind, hail, etc. Most forms will exclude theft and vandalism, but may be added by endorsement.

Liability: Premises liability can be purchased separately that covers bodily injury and property damage to others arising from the negligence of the contractor / investor. There is usually no product liability coverage for home improvements and workmanship. The contractor can protect his company from the responsibility of the uninsured subcontractor by carrying out a separate liability policy for the obligations of the general contractor.

Workers' Compensation: Even if the general contractor does not have employees, it remains responsible for injuries to subcontractors unless it is transferred to its own insurance policy (see above for Risk Transfer). If the GC collects occasional work even for one day and that person is injured on the job, the GC is responsible. Having a workers compensation policy in place for the GC regardless of whether employees are used protects both from casual work as well as the possibility that the underwriter ends up being a sub insured due to non-payment of premium , etc

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