Some Canadians dream of purchasing properties with the intent to repair them and then ‘flip them’ for profit. Some of the best deals for these types of houses usually means that they are not in the greatest shape. You’ll want to protect your investment, but because you are not living there or have any valuables, a standard policy is too much coverage. If you are looking for basic, ‘bare bones’ coverage, no-frills insurance may be the right fit for you.
What is a No-Frills insurance policy?
The term ‘no-frills’ implies something that is simple and basic, with all the non-essential elements removed. According to FSCO, a ‘no-frills’ policy offers “coverage to properties that don’t meet normal insurance standards;” or “special needs” houses. In other words, houses that have some type of structural defect or issue that will ordinarily make them ineligible for home insurance. Purchasing a house in disrepair with the intent of renovating and selling it for profit fits under this definition.
What is a basic fire policy?
If you are working toward restoring or flipping, a no-frills home insurance policy can protect it until you repair it and it qualifies for regular home insurance. This type of policy is sometimes called a “Basic Fire policy” because the perils that are insured are limited to fire damage and a few other very basic coverages. No-frills insurance coverage is often sold without any coverage for your contents. If it is included, it will be the most basic type of coverage available. In a nutshell, if fire causes damage in any way, this type of policy responds. Any subsequent water damage from the fire department or damages caused while fighting the fire in your home will also have coverage.
Advantage to No-Frills insurance coverage
What makes this type of policy attractive to some homeowners is that if there are physical problems with your home that keep it from meeting the standards set by insurers, you may save money in the long run by correcting these problems to qualify for better coverage. If you’re looking at purchasing a house in disrepair with the intent of ‘flipping’ it for profit, this basic form of coverage will give you peace of mind without having to pay for coverages you don’t need.
What is not covered in a no-frills insurance policy?
A no-frills insurance policy will cover your home against any type of damage due to a fire-related accident. However, it does not cover damages or destruction to the property insured by natural heating, fermentation, or spontaneous combustion.
It also means that this type of policy provides no coverage for things like:
- Water damage
- Burst pipes
- Storm damage
- Personal liability
How much does no-frills coverage cost?
The cost of all home insurance is reliant on many factors, including:
- Replacement cost of the property
- Proximity to fire hydrants and fire halls
- Geographic region of the home
- Home security features
In simple terms, no-frills insurance policies provide the least amount of home coverage. It offers very basic coverage for homes that don’t meet the usual standards for insurance. Be sure to contact one of our isure representatives to discuss whether or not no-frills insurance will be suitable for your needs.