Do You Know The Risks You Can Face When Flipping Houses?
To start, one thing that investors do not realize when flipping houses is that, by default, they become general contractors. They are the ones who will be subcontracting all work for the property. This means that if they do not have contractor liability then they could potentially be left exposed. Moreover, one has to be extremely mindful about who they hire and what kind of coverage is had over the project as a whole. In addition, the structure should also be insured after the fact. Here's what you need to know:
What Is Contractor Liability
True to what it sounds like, contractor liability protects you and your assets in the event that the contractor is negligent or does not do their due diligence in regards to work performed on the property. For example, if the contractor is supposed to use copper wiring, but fails to do so, then you may be denied insurance altogether. Or, suppose that the contractor does an adequate job on the surface level, but there is some misstep along the way and later on down the line, your tenant, or the home buyer gets hurts and sues. Since you do not have contractor liability, then you could be the one found solely responsible. This why is why contractor liability, is so important when flipping houses, even if you have general real estate insurance.
Why You NEED Contractor Liability
As mentioned previously, having contractor liability ensures that you and your assets are protected, especially if the contractor you hired did not do an adequate job on your property. On a construction site, anything can go wrong and thus, it is imperative that you protect your real estate investment.
Flipping houses can be extremely rewarding as the return on investment can be high. However, if you do not have contractor liability then you can find the risks to be even greater. Ensure that your investment is covered.