insurance for LLC help

[Neal Li]

Hi BP community,

I've been a lurker for a few months but finally decided to join the BP community.  

My question is regarding purchasing homeowner's insurance for properties held in a single member LLC? I've read that you need to get commercial property insurance even if the the property your LLC hold's are SFR's. The reason I ask is because the commercial property insurance is significantly more expensive. Spoke to my insurance agent and he said you can just get residential property insurance and put the LLC as "added insured". For some reason that sounded suspect to me so I was wondering how way more experienced people deal with the insurance situation?

For reference, I've only got 3 SFR's (hoping to close on my 4th in March) and was persuaded to put them all into a single member LLC. Do you guys think that it would be better to purchase future properties in my own name and just get umbrella insurance ($5 million liability) to cover myself? I'm still very new so I don't anticipate venturing beyond SFR's in the foreseeable future. It's much easier to get traditional financing as an individual...

Thanks for all your help!

[Mark Bookhagen]

@Neal Li - Yes mine is a regular resi Fire Policy bundled with liability. Also, the difference in premium between $500k and $1MM liability will surprise you (it isn't a lot), which is why I opt for the higher limit.

@Jason Bott - I agree 100%; I'm just overly cautious since it doesn't hurt to have the members/managers listed additionally even though it isn't needed.