Whether insurance is needed before anything is even under contract

Question

A question that rarely comes up until someone is mid-process: does a wholesaler need insurance before they own anything? The activity is putting properties under contract and assigning them, with no purchase involved. Nobody mentions insurance at that stage. But the work involves walking through occupied houses and taking photos, and sometimes bringing a contractor in for a look. Is there coverage people carry at the sourcing stage, or does it genuinely not start until you own something? And what happens if a contractor brought along for a look gets hurt in a seller's basement?

devon_pierce · Answer

This is a question for an insurance broker before anything is under contract. General liability is the piece that covers third party injury and property damage during site visits, and it is usually written per occurrence with a small annual premium at low limits. Any contractor you bring along should be carrying his own coverage, and you should ask for his certificate, because if he is uninsured the exposure lands somewhere and it may land on you. Specifics differ by carrier and state, so a broker will want to look at your actual activity before quoting anything.

aliyah_b · Answer

@devon_pierce that matches what I put in my startup cost sheet. What I still can't figure out is whether E and O type coverage applies to someone who isn't licensed, since a lot of the errors risk in assigning is about what you told the seller. Asking my attorney next month.

Whether insurance is needed before anything is even under contract

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