hello all- my first post here.
Recently I built a single family home with the objective of selling or renting it out if the market softened. When I purchased the builder’s risk policy, the agent would only sell BRP’s <i>for rental</i> dwellings. I told him I was in fact building the home to rent out, but that if someone wanted to buy it, then I would then sell it to them, but I had no problem with calling it a rental house.
He sold me the builder’s risk policy and I built and sold the house. I guess we pushed the envelope a little bit, the agent refused to write another one for me when I told him about it, and it turns out that a BRP for a spec house costs a bit more.
My question is- do you think I acted unethically , and why are policies for specs higher?
Thanks!
Replies
Unethical? I don't think so, since you told him your plan. It's up to you to give him the info. It's up to him to sell you the right product. I would assume the policies on spec houses are higher since the new owner of a house may become unhappy and sue the builder, whereas if you keep it as a rental there's a lot less chance of a lawsuit related to the construction. Where are you located, by the way? Never heard the term BRP.
Every thing insurance reps do is plugged in a computer.
The policy was misrepresented . He likely cant write you another one since he had to blame the last one on you. Truth be know he was trying to help you and it back fired .
If it was a rental then you would have intentions of caring for it as such. Not the same being a spec because you are in it for the money for pay off. See the point ?
Tim Mooney
Rereading the original post, I agree with Tim, you did misrepresent your plan. Should have told him that you planned to sell and only rent if you had to.
Hey thanks guys for the replies. I live in Georgia. I don't want to be too specific because I wouldn't want to get my agent in trouble, and besides I have a few more dumba** questions for you that I wouldn't want any of my friends or customers to see ;-)
To be honest, I never read the policy. (whenever I try to read one- I fall asleep!), I just go by what the agent says- I trust him, and have other policies with him. So I may be wrong here, but my understanding of a builder's risk policy is that it covers fire, theft, and weather damage done to the structure or materials during construction. After the CO, in the case of a rental, or after the sale, in the case of a spec, a new permanent policy would be written for the structure. If this is true, then what would it matter what the future use of the building would be- it would still have the same cost of replacement.(?)