Do I need to tell my insurance if my houses are in an LLC?

9 Replies

I have my homes in two different LLCs. At my last closing the topic came up about telling the insurance company about the LLCs. If the LLC is on title does that mess with the insurance? Also if I do have it switched on the insurance policy would they have to tell the bank? What do you do?

Yes, the LLC is the owner, not you, so insurance needs to be in that name. Talk to your insurance co., as LLC's can cause insurance issues. And yes, the LLC will now be shown as the owner when your policy is sent to your lender.

you can add the LLC as a named insured (not additional insured) which then you have your name and the LLC on the policy and the carts so the bank is good and you good if it burns down

My insurance company did what @Cole Schlack said. They put the LLC as a named insured. They only allowed it because it is my wife and I as members. If there were additional members they would have dropped the insurance because they don't do business insurance.

I have hundreds of clients that do this and it's works 98% of the time.  These loan officers and compliance people are just checking s box and if they see your name somewhere on the certificate they will pass it off.  Bryan is correct if you have members of your llc beyond you and spouse it gets more complicated.  It your current carrier won't add it find a new one and be sure to start with the llc and your name as the named insured then they won't have s problem 

@Bryan O. , sounds like you barely skirted a real problem because only you and your wife are members. When the insurance provider notifies your lender it may be problematic as well. Could trigger the DOS. Search topics on here of the baffled folks facing this.

 I do not put little houses in LLCs for this reason.  Landlord policies of hazard insurance are sufficient for me.  I am not an attorney, but have been placing my 5+ unit apt buildlings in LLCs for 10 years.  None of these problems arise.  Commercial properties in commercial entities is a good fit and expected by my lenders and insurance providers.  Cheers!

@Steve Vaughan I'm not sure how I would trigger a DOS clause when the property is purchased and owned in the LLC. At worst, the insurance company would say they cannot insure it and I would need to find a different provider. From the lending side there is no change of interest in any way. I probably wasn't very clear about that.

@David Cohen then it sounds like you will have to find companies that are happy to insure businesses rather than just people.