Homeowners insurance policy with quitclaim deed transfer?!?

Question

Hey everyone, would love to know how this should work. My business partner and I are going to purchase a property jointly and will do a quitclaim deed transfer to the LLC (which is just me and him for whatever it’s worth). I’m interested in this post discussing the clause of calling the loan etc.

My simple question is, how will this logistically work with the homeowner insurance policy once I transfer the deed?

My thought is option one place myself, partner, and LLC on policy and day of closing remove myself and my partner from the policy and keep the LLC on it.

Option 2 is on day of closing / day we do the quitclaim. Cancel the original policy with my name and partners name and create another policy with just the LLC to send into the mortgage company.

I know in order to close I have to show proof of insurance and get that info to the mortgage company, so basically wondering how to handle that once we transfer the deed to the LLC. Thanks in advance for the advice!

Jason Bott · Answer

@Ben Steever When the ownership transfer is complete, change the policy to list the LLC as the Named Insured.

As owners of the LLC, you are automatically covered under the policy.  So there is no need to keep your personal names on the policy.

If the lender asks for updated insurance docs a year from purchase, we would be able to issue proof of insurance in the LLC name or under the personal of any owner of the LLC.

Key is to start a policy that allows the LLC to be a Named Insured.  Most policies do this, but some Personal Lines policies do not allow it.