House Flipping Companies Need Business Insurance

Company insurance is intended to safeguard the financial assets of a business owner and is a vital investment for a home flipping business.

This article will discuss the primary insurance coverage for home flipping firms, general liability insurance, as well as additional policies that are appropriate for this industry.

General Liability Insurance for House Flippers

Every firm, regardless of sector, has risks that should be insured. General liability insurance is the most frequent and comprehensive form of coverage that company owners purchase

General liability insurance covers the following risks:

Physical harm

Damage to property

Medical expenses

Legal defence and decision

Personal and commercial harm

While general liability insurance is not legally needed for companies, operating without it is exceedingly dangerous. If your company is sued, you might face costs in the hundreds of thousands of dollars (or more). The only way to avoid this sort of catastrophe from destroying your organisation is to have an adequate general liability insurance coverage in place to assist pay for these losses.

Common Situations That General Liability Insurance For A House Flipping Business May Cover

Example 1: You are visiting a seller’s house to see the property before deciding whether or not to purchase it. You trip over the seller’s dog while strolling around the property and fall into the china cabinet, knocking it over and destroying most of the objects within. Your general liability insurance should cover damage to other people’s property caused by your company, so you should be able to submit a claim and obtain aid with replacement expenses.

Example 2: A prospective investor comes to your office to discuss an impending venture. She’s about to go down your stairs to depart when the railing breaks. She trips and falls, breaking her arm. She requests that you pay for her medical care. This is most likely covered by your general liability insurance coverage.

Example 3: One of your rivals claims that your last marketing effort slandered him. If you settle out of court, your general liability insurance will cover your legal bills, including the cost of a settlement.

Of course, this is not an entire list of risks covered by a general liability insurance policy, and certain situations may result in a specific peril not being covered. To minimise coverage gaps, it’s always better to speak with your agent about the terms of your policy.

General Liability Insurance Cost

The typical American home flipping firm costs between $500 and $1,500 per year for $1 million in general liability insurance.

The cost of your coverage will be determined by a number of variables. Among them are your:

Location

Deductible

Employees’ number

Per-occurrence restriction

The overall aggregate limit

You may be able to get general liability insurance at a lower cost if you buy it as part of a business owner’s policy (BOP) rather than as a separate policy. A business interruption policy (BOP) is a more complete option that covers numerous types of coverage, such as business interruption and property insurance.

Other Types of Coverage Required for House Flipping Businesses

While general liability insurance is the most crucial, there are various different types of coverage to be aware of. The following are some additional forms of insurance that all home flipping firms should have.

Insurance for Commercial Property

All of the tools and materials you need to restore and flip properties cost a lot of money to buy. If you were to lose most or all of your business property in a fire, you could find it difficult to rebuild it financially. If the damage was caused by a covered occurrence, you may make a claim with your insurer to get financial assistance with replacement expenses.

Insurance for Commercial Vehicles

Commercial vehicle insurance is required if you own a car or truck that is mainly used for business purposes. A business vehicle insurance coverage will guarantee that you fulfil your state’s insurance requirements. It will also shield your company from legal responsibility. If you or one of your employees causes an accident, the insurance coverage will cover car repairs, medical treatment, and legal expenses if a lawsuit is filed.

Coverage Options for Some House Flipping Businesses

In addition to the insurance listed above, your home flipping company may need other forms of coverage based on particular features of your activities. Some of them may not apply to you, so be sure to ask your agent whether policies are appropriate for your company.

Umbrella Insurance for Businesses

A commercial umbrella insurance coverage will protect your company if your general liability insurance policy limitations are surpassed, such as if you lose a costly case. Once your general liability insurance limitations are reached, the umbrella policy will continue to pay until its own maximum is reached.

Insurance for Home-Based Businesses

If you run a house flipping company out of your home, your homeowner’s insurance may not cover injuries caused by commercial activity. You must examine your coverage with your homeowner’s insurance carrier to establish what is and is not covered. A home-based business insurance coverage may be added to your current homeowner’s policy, or you may need to get a separate policy.

Additional Security Measures for Your Company

Although investing in company insurance is simple (and necessary), it should not be your first line of defence. Yes, insurance will reimburse your company for cash losses incurred as a result of an occurrence, but it is much preferable to avoid losses altogether.

With this in mind, here are a few steps you can take to better secure your company:

Make use of legally binding contracts and other business agreements. (We provide free templates for several of the most often used legal forms.)

To safeguard your personal assets, form a limited liability company (LLC) or a corporation. (To discover how to incorporate an LLC or company in your state, see our step-by-step tutorials.)

Keep your company licences up to date.

Streamline the internal procedures of your company. This will eliminate unneeded variables from routine activities and establish a secure, consistent environment in which to do business.

If your company is an LLC, you should check into LLC insurance.