Insurance issues are one of the most common last-minute causes of closing delays.
Hard money deals often involve vacant or rehab properties, which require different coverage than owner-occupied homes.
If coverage does not match the property’s condition and occupancy, the lender and escrow cannot close cleanly.
The fastest path is aligning insurance early with your property status and timeline.
Builder’s risk is common for rehab projects, and vacant coverage is common when properties are empty.
Use this guide to avoid insurance friction and keep your closing on schedule.
At a glance
- Insurance must match vacancy and rehab status
- Builder’s risk is common for renovations
- Vacant properties need vacant coverage, not standard homeowner policies
- The lender will require correct mortgagee/loss payee language
- Proof of coverage must be ready before closing
- Fix insurance early to avoid “everything is ready except insurance” delays
Why insurance is different on investor properties
Investor properties often have:
- vacancy periods
- active construction
- higher theft and damage exposure
- changing occupancy status (vacant → under construction → leased)
Standard owner-occupied insurance often does not match these realities.
Common coverage types investors encounter
- Builder’s risk insurance: commonly used during renovations and construction phases
- Vacant property insurance: commonly used when a property is empty
- Landlord insurance: used once the property is leased and stabilized
- General liability (project-specific): may be needed depending on scope and contractors
- Flood coverage: required where applicable
Exact requirements vary by deal, property type, and location.
What lenders and escrow typically need from your policy
To avoid last-minute problems, have your insurance agent ready to provide:
- declarations page
- policy effective date aligned to closing
- coverage limits that meet the loan and property requirements
- correct mortgagee/loss payee language for the lender
- proof of premium payment (when required)
The fastest way to create delays (avoid these)
- binding the wrong policy type for a vacant or rehab property
- mismatched effective dates (coverage starts after closing)
- missing lender mortgagee clause or incorrect entity name
- discovering too late that the carrier won’t insure the property in its condition
Next step
Hard money program: https://ambitionlending.co/hard-money-loans/
Fix & flip program: https://ambitionlending.co/fix-flip-loans/
Submit a deal: https://ambitionlending.co/contact/
Frequently Asked Questions
Why does insurance delay hard money closings?
Because escrow and the lender need proof that the collateral is insured correctly. If the policy type or paperwork is wrong, closing cannot proceed.
What is builder’s risk insurance?
Builder’s risk is coverage commonly used during renovation or construction phases to insure the property while work is being performed.
Do vacant properties require different insurance?
Often yes. Vacant properties can require vacant coverage because risk profiles differ from owner-occupied homes.
What does the lender need to be listed as on the policy?
Typically as mortgagee or loss payee with correct legal naming. Your insurance agent can issue the correct language needed for closing.
When should I bind insurance?
As early as possible once you’re under contract, so coverage and paperwork are ready before closing.
What is the best way to prevent insurance problems?
Tell your agent the property’s occupancy status and rehab scope, and ensure policy type and effective dates match the closing timeline.
Hard Money Loans: https://ambitionlending.co/hard-money-loans/
Fix & Flip Loans: https://ambitionlending.co/fix-flip-loans/
Contact: https://ambitionlending.co/
