NREIG Vacant Land Liability Insurance: [ Ссылка ] (REtipster Affiliate Link)
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A lot of land investors are confused about liability insurance.
- When does a landowner need it?
- What exactly does it do for them?
- How much does it cost?
- Where can you get it?
- Is it even necessary?
The idea behind this type of insurance is to protect the landowner from a few key things:
- If a person wanders onto the property, hurts themselves, and then sues the landowner for it, it can help the landowner pay for their defense costs.
- Likewise, it can also cover the medical expenses of anyone who is injured on the property.
The coverage limit is typically $1 million to $2 million per occurrence and $2 million to $5 million annually (if you're unlucky enough to have multiple injuries on your property).
How Much Does It Cost?
The cost of a vacant land liability insurance policy is based on the property's size and location (i.e., the state where the property is located).
Because it's just land and no structures or improvements, there aren't a lot of factors that come into the equation.
Even so, you'll find that the prices can vary widely between insurance underwriters.
Since most insurance underwriters and agencies have designed their whole model around home insurance and other properties with buildings on them (the type that owners will buy and hold for years at a time), the premiums are set up to be paid annually, not monthly.
This can be a cumbersome system for land flippers, who usually don't intend to hold these properties for years.
The company that seems to have the best system for handling these types of policies is the National Real Estate Insurance Group (NREIG).
Frequently Asked Questions:
What is Involved With Adding or Removing Coverage to a Lot When it gets added to and removed from your inventory?
NREIG has a user dashboard where it's relatively easy to add and remove properties from coverage from your computer (without having to pick up the phone).
Are there any discounts for adding more properties to your policy at once?
No, there are no discounts for having more properties covered.
How often are claims filed against these kinds of policies?
Not often, but when they do, they always seem to come out of left field, and it's the kind of thing most landowners wouldn't have anticipated.
Do You Need It?
I can't advise you on how to handle the property insurance situation, but I can tell you what I do.
I don't bother getting insurance on my land unless my intent is to hold it long-term OR if the lot is in a high-traffic area (like a metropolitan neighborhood with a lot of regular foot traffic).
Why? Because it's a hassle to constantly call my insurance agent to add and remove properties from my policy. It would make sense if my plan was to hold it for more than a year, but when my goal is to sell each one ASAP (and since new ones are always coming onto the balance sheet), it's just too much busywork for too little benefit.
This is opening me up to a small amount of risk, but it is very, very, very small. So small that it's not worth the very low price of insurance (the reason the cost is so low is that even the insurance company knows it's highly unlikely that anything would happen and/or that you'd get sued for it).
Lawsuits can happen, but they're pretty rare (I've never heard of one happening to anyone in my entire career).
Even if you get sued, this is why we have LLCs, to protect us from personal liability and make sure only the LLC gets hit.
Cost of Liability Insurance: I've seen prices ranging from $20 to $350 per year per lot. The price ranges depending on the size, zoning, location, and surroundings.
Where to get it?
If you want to buy this type of insurance for one or more of your properties, you can get it from any insurance agency that handles homeowners insurance. It's basically the same product type as homeowners insurance, just a lot simpler and cheaper.
If you're looking for a more specific company that handles this type of insurance, here are a few places to get quotes.
National Real Estate Insurance Group: [ Ссылка ]
Obie Insurance Services: [ Ссылка ] (REtipster has an affiliate link for this one - we worked with them closely to help them develop this interactive flood/hazard risk insurance map): [ Ссылка ]
