As the U.S. economy continues to improve, Hard Money/Rehab Lenders will play a vital role in the recovery of the housing market.  Renovation Builders Risk enables Hard Money/Rehab Lenders to reduce their transactional risk by offering builder’s risk insurance to their clients in conjunction with their loans.  Renovation Builders Risk is a blanket builder’s risk policy that is owned by the lender and includes access to a secure website where the lender can add their borrowers as additional insureds under the lenders policy.  The borrower still pays the premium for the insurance at loan closing, and the coverage protects both the lender’s and the borrower’s interests in the rehab project, but the prepaid insurance remains in effect protecting the lender even if the borrower defaults on their loan.

The Concept

• A blanket builder’s risk insurance policy underwritten with the lender as the initial named insured
• A secure website where the lender can add their borrower and the financed rehab project as additional insureds under the lender’s policy for either a 6 month or 12 month coverage term.
• The borrower pays the premium at loan closing and receives a Certificate of Coverage that the lender prints from the Renovation Builders Risk website
• The lender forwards the premium payment to Renovation Builders Risk
• The lender has 24/7 access to insurance data covering their portfolio of loans
• The lender deletes the project from the blanket policy when the loan is paid off and as the primary named insured, receives a check for the unearned premium which they credit back to the borrower’s account following loan payoff.

Advantages to the Lender

• The Lender’s portfolio of loans is covered under a single uniform policy that provides coverage for theft and vandalism up to the limits reported for the project.
• The Lender is assured that the loan collateral is covered and the premium has been paid.
• The Lender’s investment has continuous pre-paid coverage under the lender-owned blanket policy even if the borrower defaults on their loan
• The blanket policy provides coverage for both occupied and unoccupied property

Advantages to the Borrower

• Renovation Builders Risk is a convenient, efficient way to obtain the hazard insurance required by their loan agreement.
• The borrower receives broad coverage including theft and vandalism coverage up to the limits purchased on their project.
• There is no minimum earned premium and the borrower can maximize their unearned premium refund by completing their project early.