Insurance policy question

Hoping there are some insurance pros on this site.

I am trying to buy a SFH from a builder in FL. They will be leasing the home back from me for 3yrs and maintaining it as a model home. Its being sold fully furnished as its a high end model home being sold at over $900K.
The builder wants a commerical insurance policy on the property for proper protection just incase someone falls and gets hurt and dedides to sue.

I want residential but not sure about the coverage. My mortgage broker can not close the loan with a commerical policy using 100% financing. The sellers contract will state investment property not owner occuppied.

Question: Can I get a residental policy with a ryder in it to give the lessee the proper coverage in the event of a lawsuit. My mortgage broker suggested buying 2 policies since the seller will not budge on this. Showing the residential policy for the closing but I have to buy a 1yr policy and basically throwing away $4000-5000. And getting a commerical policy for the seller…

Any one offer some help…The property is in Orange county, FL


getting liability coverage is the easy part, the lessee needs to carry his own insurance; it a very strange relationship for the leasor to be provide insurance coverage (hope you collecting a premium rent to cover this cost).

the hard part is nobody will be living there. insurance companies hate insurance vacant buildings and most have a clause that revokes the insurance if vacant for more than 30 days. The only way I have gotten aroudn this (for rehabs) is to claim it as a 2nd home; however, since you have lease the property out, that really not a viable avenue. Also, in effect you have leased it for commerical purposes. Thus I’m not sure getting a residential policy is possible. I’m not an insurance agent, but that’s 2 cents based upon my experience.

The builder would be protected with liability regardless if you have a “commercial” policy or a landlord (residential) policy. The problem comes in where you really have an “unoccupied” dwelling you are trying to insure.

What I would do, is make the builder carry the insurance as part of your “lease-back” include it right in that lease. He already has a General Liability Policy for his business, which will extend to this property too. Plus, if he builds on a regular basis, has a Builder’s Risk policy he places on all his new starts & completed but not yet sold properties. He can continue this “all-risk” coverage for probably up to 24 months before you’d have to do anything.

Be sure you are listed as an “additional insured” if you do this, meaning you’d be protected, even though he is the one buying the insurance. This is done all the time in a commercial Triple Net Lease type of arrangement - same situation as yours.

Good luck.