Landlord Insurance vs homeowners insurance vs LLC

[Hogan Underhill]

I bought a town house in MN in 2020 and have been renting it out for a couple of years. I do not live in the property. Currently, I have an LLC but no insurance.

My question is do I need insurance if I have an LLC? Or would it make sense to have landlord insurance and the LLC

[Greg Scott]

On a town house, I'd rather have good insurance than an LLC!

If you have a mortgage, most mortgages require you to have insurance.  You may be in violation of a loan covenant.

If you have no mortgage, you are a bigger target for a frivolous lawsuit. Insurance would cover legal costs. If you have no insurance, your LLC would have to pay for the legal defense. So, if you don't mind losing everything the LLC owns, sure, save the cost of insurance.

I'm assuming you've been managing your LLC properly. If you haven't followed solid corporate practices, the lawyers get to go after your other assets too. In other words, you may have zero protection whatsoever.