Flipping Homes? Don’t Make These Insurance Errors!

August 20, 2025

See How We're Different

or call us: 888-412-7630

By: Vernon Williams | Commercial Agency Advisor & Principal

888-412-7630 | vwilliams@thebrightonfinancial.com

Flipping homes can be incredibly profitable but it’s also full of risks. One wrong move with your insurance, and your entire return on investment can vanish overnight.

Every market comes with its own set of challenges from natural disasters like floods, storms, or wildfires, to theft, vandalism, or even injuries on the job site. And don’t forget permit issues, renovation delays, or coverage gaps during vacancy periods any of these can put your project (and your profits) at risk.

A single insurance oversight doesn’t just delay progress—it can lead to uncovered losses that cost you tens of thousands.

Don’t let avoidable mistakes sink your flip.

Protect your investment with the right insurance coverage from day one.

Here are the Top 5 Fix-and-Flip Insurance Mistakes Investors make and how to avoid them.

1. Delaying Coverage Until Renovation Starts

Many investors mistakenly believe they don’t need insurance until the renovation begins. But vacant properties, regardless of their locations are easy targets for theft, vandalism, fire, and weather-related damage. A delay in coverage could leave you paying out-of-pocket for early-stage losses.

How to Avoid It:

Secure vacant property insurance or a builder’s risk policy immediately after closing, not when the first hammer swings. Partner with an insurance broker who understands the unique timing and risks of fix-and-flip projects.

2. Using Homeowner’s Insurance Instead of Proper Fix-and-Flip Coverage

Standard homeowner’s policies don’t cover investment renovations. Using one on a flip is a major fix-and-flip insurance mistake. Instead, you need tailored coverage like vacant property insurance or builder’s risk insurance designed for flips.

How to Avoid It:

Use investment-specific insurance like builder’s risk or vacant dwelling policies. These are built for renovation risks and contractor activity.

3. Underinsuring Your Project

Trying to save money by underestimating your coverage? Construction costs, permitting delays, and supply chain issues can quickly derail your budget anywhere not just in high-cost markets. If your policy doesn’t reflect your full investment, you risk receiving only partial payouts when something goes wrong.

How to Avoid It:

Insure based on the replacement cost and the full renovation value not just the purchase price. Build in a buffer for delays, labor shortages, and inflation. Ask your insurance provider for a proper risk assessment tailored to your project scope.

4. Not Requiring Proof of Contractor Insurance

A common fix-and-flip insurance mistake is trusting your contractor’s word without checking their Certificate of Insurance. If an uninsured worker gets hurt on your flip, you could be held liable. Always verify coverage before anyone steps on site.

How to Avoid It:

Always ask for and verify their Certificate of Insurance (COI). Ensure it includes general liability and workers’ comp, and have your name listed as

additional insured.

5. Ignoring Regional Risks

Every market has its own risks: wildfires, floods, tornadoes, hurricanes, or earthquakes. A one-size-fits-all policy from a national provider might miss critical regional exposures that could leave you unprotected.

How to Avoid It:

Work with a broker who understands your specific market and local hazards. Ask about coverage for regional threats like windstorms, fire zones, or ordinance & law requirements. Tailored protection is key to flipping with confidence.