Insurance for Investment Properties

When an investor is purchasing a property with the intention of leasing it out for long-term rental income, what type of investment insurance policy do they need? The answer, of course, is it depends!

The three most common policy types are:

  • Landlord Dwelling
  • Vacant Dwelling
  • Builder’s Risk

If the property is already leased with a tenant in place, then a Landlord Dwelling (also called a Dwelling Fire or DP-3) is the proper policy to cover the home.

But what if the home is vacant and needs renovations before a tenant can move in? In that situation we have a couple of options, depending on the extent of the rehab.
Most often, a Vacant Dwelling policy is the answer. It covers the property while more basic renovations are preformed, usually encompassing a few of the following “big five”:

1. Foundation

2. Plumbing

3. Electric


5. Roof


Those are the most common types of repairs which can take a few weeks to complete.

Now if the property will undergo major, down-to-the-studs renovations, a Builders Risk policy is the most appropriate policy. A Builders Risk policy covers the dwelling in the course of construction, and can usually be written on a 6-month or 12-month basis.
Understanding the proper type of investment insurance policy needed will protect the investor from potentially having a claim denied if the wrong policy is in place.

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Feel free to reach out if you have any insurance questions:
Lee Siegel
972-930-7086 x114

Be sure your agent asks the right questions to help you determine the proper coverage!



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