The short answer is: It depends on the scope of the renovation.
Many real estate investors assume a vacant home policy automatically covers a renovation project. In many cases, it does not. Likewise, Builder’s Risk Insurance isn’t always required—but it often becomes the better choice once construction begins.
Here’s how to determine what you need.
Scenario 1: Vacant Home — No Renovations
Best Choice:
✅ Vacant Home Insurance
If you purchased a property that is simply sitting vacant while you clean it up, market it, or wait to sell, a vacant home policy is usually appropriate.
Examples:
- Cleaning
- Painting
- Minor cosmetic work
- Landscaping
- Waiting for permits
- Preparing to sell
Scenario 2: Interior Remodel or Fix-and-Flip
Best Choice:
✅ Builder’s Risk Insurance
If you’re actively remodeling the home, Builder’s Risk Insurance is generally the better option.
Examples:
- Kitchen remodel
- Bathroom remodel
- Flooring
- Drywall
- Electrical
- Plumbing
- Cabinets
- Windows
- Roofing
- HVAC
- Interior demolition
Builder’s Risk is designed specifically for properties under construction or renovation.
Scenario 3: Major Structural Renovation
Builder’s Risk Insurance is almost always recommended if you’re:
- Adding square footage
- Moving load-bearing walls
- Building an ADU
- Adding a second story
- Rebuilding after a fire
- New construction
Many vacant home policies will exclude or severely limit coverage once major construction begins.
Can You Have Both?
Yes.
In some situations, an investor may need both coverages, depending on the carrier and the project’s timeline.
For example:
Phase 1
Purchase home
↓
Property sits vacant while permits are obtained
✅ Vacant Home Policy
Phase 2
Construction begins
↓
Convert to
✅ Builder’s Risk Policy
Phase 3
Construction completed
↓
Sell the home
or
Rent the home
↓
Convert to
- Homeowners Insurance
- Landlord (DP-3) Insurance
Why Not Just Keep a Vacant Home Policy?
Many vacant policies contain restrictions such as:
- No coverage during major remodeling
- No contractor operations
- No structural changes
- Limited theft coverage
- No coverage for building materials
- Exclusions for losses caused by construction activities
If a fire starts because of welding or electrical work during renovations, a vacant policy may deny the claim if the construction wasn’t disclosed.
What Does Builder’s Risk Cover?
Builder’s Risk Insurance is designed for projects under construction and typically covers:
- The building under renovation
- Building materials
- Fixtures
- Cabinets
- Flooring
- Plumbing supplies
- Electrical materials
- Theft of materials (subject to policy terms)
- Fire
- Wind
- Vandalism
It is specifically intended to protect the investment while construction is in progress.
What About General Liability?
Builder’s Risk protects the property.
General Liability protects you if someone is injured or you damage someone else’s property during the project.
If you’re hiring contractors or acting as an owner-builder, you should discuss General Liability needs with your insurance agent as well.
Myth vs. Fact
❌ Myth:
“My vacant home insurance automatically covers my flip.”
✅ Fact:
Many vacant home policies either limit or exclude coverage once renovation or construction begins. Always notify your insurance company before starting work.
Our Recommendation
For most fix-and-flip projects:
| Project Stage | Recommended Coverage |
|---|---|
| Vacant property with little or no work | Vacant Home Insurance |
| Active remodeling or renovation | Builder’s Risk Insurance |
| Large structural renovation or additions | Builder’s Risk Insurance (often with General Liability) |
| Completed project | Homeowners, Landlord, or Commercial Property Insurance |
Final Thoughts
Every fix-and-flip project is different. The right insurance depends on:
- Whether the property is vacant
- The scope of the renovations
- Whether contractors are involved
- The property’s value
- The estimated construction cost
- The expected project timeline
Choosing the wrong policy could leave you without coverage when you need it most.
Need Builder’s Risk or Vacant Property Insurance in California?
Whether you’re purchasing your first flip or managing multiple investment properties, StarWest Insurance Services can help you choose the right coverage from start to finish.
We insure:
- Fix-and-flip properties
- Vacant homes
- Builder’s Risk projects
- Rental properties
- New construction
- Owner-builder projects
StarWest Insurance Services, LLC
Westminster Office
13752 Goldenwest St.
Westminster, CA 92683
Irvine Office
15375 Barranca Pkwy, Building L
Irvine, CA 92618
Office: (714) 893-7271
James C.Q. Banh: (714) 867-7799
No Broker Fees Since 1995