Insurance - Know Your 'Perils'
Make sure when you buy an insurance policy for your investment property (especially "flip" properties) you are asking for "special" perils.
Peril - A specific risk or cause of loss covered by an insurance policy, such as a fire, windstorm, flood, or theft
Basic Form (NOT GOOD COVERAGE!!!!) - Basic Form (peril) policy tends to be quite limited in scope and should be used with care. It is usually offered by carriers when the property is not in good condition, is under remodel, vacant or is old and without wiring, plumbing or heating updates. Coverages included in a typical Basic Form policy are:
Windstorm or Hail
Aircraft or Vehicle Collision
Riot or Civil Commotion
Broad Form (NOT GOOD COVERAGE EITHER!!!) - Broad Form (peril) policies offer more coverage than Basic Form. They include coverage for all of the same hazards in a Basic Form policy plus several additional hazards which are expressly named. Like the Basic Form policy, a Broad Form policy covers only named perils. Coverages included in a typical Broad Form policy are the same as in the Basic Form policy plus the following;
Falling Objects (Tree’s)
Weight of Ice and Snow
Freezing of Plumbing
Accidental Water Damage
Artificially Generated Electricity
Special Form (THIS IS WHAT YOU WANT!!!)- Special Form (peril) policy reads opposite of a Basic or Broad Form policy. All unlisted perils are covered perils. This can be extremely beneficial to the insured and is the ideal coverage to have. Common Special Form Policy Exclusions:
Ordinance or Law