Llc and Excess of liability insurance

[Annie Laporte]

Hi , 

I'm new here, i'm french  and i need some advices regarding liability insurances : I'm just about to buy a property  near Birmingham Al (closing next week ) to rent and i would like to protect myself as much as possible regarding liability . 

at the very beginning I just wanted to buy the property on my name and to take a good umbrella insurance , it's easier and I'm not so keen on administrative stuffes espeacially if not needed ... but I discover that no companies will sell me an umbrella because i'm a non resident alien (and because I don't have a car insurance in the US) . They all suggested to rise the amount of liability to 1 million and told me it was the same than an umbrella but i'm not so confident . What do you think about that ? Is it truly the same regarding every complaint a tenant can do against me ? 

Because I have other properties in France, I thought also of creating an LLc but I heard that if you're a single member Llc in alabama , liability can be pierced . I also heard that it won't happen if your LLC is in Wyoming , because laws protect single member Llc there , is it true ? Then what would you recommend ? Creating one LLc in Wyoming ( which would own the property) and one in Alabama ( which would rent the property ) , the Alabama one would be a member of the Wyoming one ? Or just register the Wyoming LLc as a foreign LLc in Alabama ?

to end, if LLc is the solution which liability insurance would you recommend for my LLC ? Which kind ( excess of liability ? Business umbrella if possible ? Other ?) and which amount of liability ? ( The value of the property will be 250000 dollars , no mortgage )

 Thank you very much for your help ! 

[Denise Evans]

I'd be more comfortable with $1 million of liability. All it takes is a house fire or similar and a death to climb way above your $350,000 limits. 

In Alabama, a wrongful death lawsuit carries punitive damages as the measure of damages. That can reach $1 million quickly. In other states, the measure of damages is the loss to the person bringing the lawsuit. For a baby with a long life expectancy, damages might be large. For an elderly person with multiple health problems the damages might be small. All irrelevant in Alabama.  How much does the jury think the defendant should be punished for the death is the measure here.

When I say "punitive" I don't mean how horrible was the property owner in its actions that led to the death. It's just how the jury wants to redistribute insurance company wealth.  I've been a defendant in a boundary line lawsuit (I was the evil developer) where exactly that happened.  I had insurance company lawyers. My surveyor, who was also a defendant, had insurance company lawyers. The plaintiff was a little old lady with a lawyer who dressed liked he bought his clothes at the church rummage sale.  After a week of trial, SIX of the jurors wanted to give the little old lady a huge paycheck of actual and punitive damages, on the first vote. Because supposedly we cut down 1/3 acre of "her" so-called "old growth hardwoods" of poison ivy and hackberries (a trash tree around here.) It took a solid day of jury deliberations and a cautionary instruction from the judge for them to do their job according to the law and the facts and return a verdict against the plaintiff.  Which should have been clear from the very first minute.  

So, get a $1 million. Additional liability coverage is relatively cheap.