A hard money loan is an asset-based type of financing where the loan is secured by real property and is for business purpose use only. In order to additionally protect their investors, a hard money lender requires any borrower to insure the non-owner-occupied property for the life of the loan.
The hard money lender will generally require the borrower to show proof of the following before closing:

An insurance policy on the secured property in an amount guaranteed to replace the existing improvements. The loss payee clause should be a 438 BFU endorsement.

Beneficiaries of the Note to be additionally named insureds under the property insurance policy.

At Murk Investments Corp., we wanted to briefly share with you a few types of insurance policies generally used when taking out a bridge loan, a flip and fix loan or refinancing a construction loan.

A Builders Risk Policy – This risk policy is a type of construction insurance; it protects the construction projects that a property will undergo from any covered losses such as weather or fire damages or even theft or vandalism. This policy is required for fix and flip type loans. With this type of insurance, it is important to understand what is and what is not covered as every policy can be specific and offer different types of coverage. Your type of coverage will depend a lot on where your property is located. Most hard money lenders will require you to get this type of insurance, since most insurance policies do not cover vacant properties.

Rental Property Insurance and Tenant Dwelling Policy – These types of policies are when the properties are occupied by someone that is not the owner. Even if there is a tenant for only a day or two, this policy must be in place.

General Liability Insurance – This type of insurance protects investors if anyone is injured on your property and wants to hold you responsible.
It’s important to know what type of insurance you will need as an investor to properly protect yourself and property in order to get a hard money loan. We highly recommend you speak with an insurance agent to properly insure your assets.

At Murk Investments Corp., we provide business purpose loans secured by real property. We have the most competitive rates in the area, with no junk fees.
We collaborate with you to find the best solutions.

If you want to learn more about the type of insurance needed for hard money loans or what loans we offer, call 760-453-0409 or visit our hard money lender contact page. We look forward to speaking with you!

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