July 1st, 2014
Getting a fixer-upper home can be a great way find a less expensive property and design it in a way you see fit, but this investment could turn into a risk if a problem occurs while you're working on it. If something goes wrong during construction, your home could be damaged and you'll have to pay more than you budgeted for. One way you can financially and legally protect yourself is by getting insurance. Here are a few types of homeowners insurance you can get for a fixer-upper:
This coverage is best if the property you bought only needs a few cosmetic repairs, and you will be done with everything in a month. If your repair schedule needs a little more time to complete, look into other options.
When a home is older, you have to put in more effort to complete your repairs. Chances are if it has been on the market for awhile or was built a long time ago, its value will be lower. Homeowners insurance form 8 may be best if the replacement and repairs costs are more than the actual value of the property.
If there is damage to your home during construction, you may have to start over at square one. With a builder's risk policy, you will be protected if part of your home is damaged. For instance, if the roofers accidentally rip a hole in your ceiling and you need new shingles.
In some instances, you could lose your policy if your property is left vacant. This can be because you need extra time for repairs or you're not sure how you're going to design it yet. To protect you in case anything happens, such as someone breaking in or a fire starting, you can get a vacant dwellings policy. This can protect your investment while you are away.