--- title: What Insurance Coverage Is Required for Fix and Flip Properties? description: Fix and flip insurance protects both the investor and the lender during a renovation project. Standard homeowner policies do not cover investment properties under renovation, so lenders require specific coverage that matches the risk. Understanding the types of policies needed helps investors budget… url: "https://ahlend.com/docs/what-insurance-coverage-is-required-for-fix-and-flip-properties/" updated: "2026-10-20" category: "Fix & Flip Loans" --- # What Insurance Coverage Is Required for Fix and Flip Properties? Fix and flip insurance protects both the investor and the lender during a renovation project. Standard homeowner policies do not cover investment properties under renovation, so lenders require specific coverage that matches the risk. Understanding the types of policies needed helps investors budget accurately and close on time.   ## Why Fix and Flip Insurance Is Different  Investment properties under renovation carry more risk than owner-occupied homes. Specifically, the property is often vacant, under construction, and exposed to theft or damage. As a result, lenders require policies designed for these conditions rather than standard homeowner coverage. Additionally, the required coverage shifts as the project moves from purchase through renovation to sale.   ## Builder's Risk Insurance  Builder's risk insurance is the core policy during renovation:  - Covers damage to the property during construction  - Includes fire, theft, vandalism, and weather-related losses  - Covers materials on site and sometimes materials in transit  - Runs for the length of the renovation  - Can be extended if the project takes longer than planned    For example, a renovation may need a builder's risk policy with coverage that matches both the property value and the cost of improvements. Furthermore, lenders want the policy in place at closing.    ## Vacant Dwelling Insurance  Vacant dwelling coverage applies when the property sits without a tenant or owner:  - Covers structural damage during vacancy periods  - Includes fire, water, and certain types of theft  - Excludes damage from prolonged unoccupied status in some cases  - Often needed alongside builder's risk during transitions    In contrast, standard homeowner policies typically exclude vacant properties or cancel coverage after a short vacancy period.    ## General Liability Insurance  Liability coverage protects against injury claims on the property:  - Covers contractors, visitors, and trespassers who may be injured on site  - Provides coverage limits set by the lender's requirements  - Often required by lenders as part of the overall policy package  - Can be included in a package policy or purchased separately    For example, a visitor who trips on construction debris could file a claim. As a result, liability coverage protects the investor from meaningful out-of-pocket costs. Specific coverage amounts depend on the lender and the policy structure.   ## What Lenders Require at Closing  Lenders typically require[specific documentation](https://ahlend.com/docs/what-documentation-is-needed-for-a-fix-and-flip-loan/) before funding:  - A certificate of insurance listing the lender as loss payee and additional insured  - Coverage amounts that match or exceed the loan value  - Effective dates that cover the entire loan term  - Proof of premium payment for the initial term  - Policy types matched to the project (builder's risk, vacant dwelling, liability)    Additionally, some lenders want the full policy, not just a certificate.    ## How to Manage Fix and Flip Insurance Across the Project  Coverage needs shift as the project progresses:  - Purchase phase: Vacant dwelling or basic property coverage  - Active renovation: Builder's risk plus liability  - Listed and marketed: Continued coverage with adjustments for completed status  - Extended timelines: Renewals or [extensions](https://ahlend.com/docs/how-do-fix-and-flip-loan-extensions-work/) to keep coverage current    Consequently, investors should confirm with their insurance agent that the policy covers every phase of the project.   ## Common Insurance Mistakes  A few common mistakes can lead to coverage gaps:  - Relying on standard homeowner policies, which typically exclude renovations  - Underinsuring the renovation cost rather than the full project value  - Letting coverage lapse between phases  - Ignoring liability coverage in favor of property-only policies  - Missing the lender's loss payee requirements    In short, working with an agent familiar with investment property coverage reduces the risk of costly gaps.   ## Summary  Fix and flip insurance covers the unique risks of renovating an investment property. Builder's risk handles damage during construction, vacant dwelling coverage protects the property between phases, and liability insurance protects against injury claims. Lenders require specific coverage types, amounts, and documentation before funding. When you understand what fix and flip insurance requires, you can budget accurately, close on time, and protect the project from start to finish. AHL helps investors align their coverage with the actual requirements of each loan.