The type of policy available to property owners varies based on the type of building, the building occupancy type and the frequency of the building being occupied.

There are six categories for insuring investment properties, but we will look at only DF1 and DF3.  

The DF1 policy is a base policy with limited coverage for the building.  It can be used for vacant (rehab/flip), rental or owner occupied properties, but the coverages are generally very limited, usually to:

1. Fire and lightning
2. Explosion
3. Windstorm
4. Hail
5. Riots
6. Smoke damage
    

The risk to any insurance policy is the exclusions. This list is usually rather lengthy and is “required” reading.  It explains in detail the various conditions for which the policies offer no coverage,  Some of the common EXCLUSIONS include:   

1. Flood and water damage
2. Fr
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            One of the most boring topics – to most real estate investors, anyway -- is insurance.  That’s why so many get themselves in trouble when it’s too late to do anything about it. 

             As a real estate investor, you NEED to understand the basics of insurance that directly impacts your business.  Property insurance and liability insurance are the backbone of your business’s asset protection plan. Having a major insurance issue – and not having the proper insurance coverage in place – could easily cause your real estate business to go OUT of business, and take all the wealth you’ve built up over time down the drain with it.

            Our goal, thru these articles, is to provide a better basis to your real estate insurance knowledge so that you can ask the right questions and make the right decisions when it comes to your insurance.

            The first topic, as a basis of understanding, is to discuss “reconstruction value” versus “street value”.  Too often people use street value—what the property would sell for today—to try to determine what value they need to use to insure a property.

      &n
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