Umbrella Insurance policy.

[Chas Lumley]

Hey all,

I'm looking to make an offer on my first rental this week and was wanting to get different inputs on LLC vs Umbrella policies.

I will be using a conventional loan and I was told by my loan officer that I can not buy the property under an LLC, but I could transfer to an LLC after acquiring.

This is just a duplex, so my total number of rental units will just be 2. I own my own house and I own some land out of state, so I have assets I want protected.

I have quotes and will be purchasing an insurance policy that provides 1 million in landlord liability and I can also purchase an additional 1 million in an umbrella policy.

My question is, is it even possible, or has anyone heard of a landlord getting sued and losing over $2 million on a simple duplex? I feel like I'd have to do something crazy negligent to even possibly have a lawsuit that severe. 

All inputs are appreciated.

Thanks!

[Greg Scott]

We have owned 14 SF rentals and 4 apartment complexes totaling near 1,000 units, and over 17 year period we have been sued exactly once.

We had a 350lb resident that missed the bottom step of the staircase, fell and hurt himself.  He sued claiming the stair was defective, even though he told his neighbor he just wasn't paying attention and missed the step. His lawyer even told our lawyer he had a crappy case.

I was a bit annoyed that our insurance company settled for a $70K payout.  Fortunately, he got nothing. His lawyer took 1/3 of the settlement, and he owed the hospital $90K.  Our portion out-of-pocket was the $3K deductible.

I'm friends with numerous apartment owners.  A handful have been sued.  None of the lawsuits had a material affect on the business.