So I've been getting insurance quotes for a property I am purchasing to rent out. I was going to buy the property under a LLC, however my insurance provider stated that I would need to get a SEPARATE policy for personal liability under an LLC. This brought the price up significantly and cut my margins. So now I am considering closing under my personal name but the insurance lady stated that the maximum personal liability coverage is 300k without buying an additional umbrella policy for additional personal liability. I want to make sure I am making the right choice and hedging risk, but I am also concerned about how much is too much insurance and protection when it comes to cutting into profit margin.
Here in Dallas most investors get a $1 million policy. It is best to have a higher $$ amount just in case you are sued and remember lawyers will sue the LLC and the owner of the LLC.
You may want to give National Real Estate Insurance Group a call. Their President is a BP member and they offer insurance with the higher liability limits and things like that.
Disclaimer: I have no affiliation other than being a satisfied customer.
LLC insurance is more expensive in my experience. We have an LLC for a multifamily but not an LLC on the single family. It is just the way we did it. We have one million liability on both but the LLC is more pricey even considering the risk difference.
Are you getting a loan? Is the bank OK w/ it either way (LLC or personal purchase)? just checking..
It's prudent to have an umbrella liability coverage if you're dealing with renters. I have a personal umbrella policy and my LLC (for a multi unit property) has one too. That may be overkill, but it's few bucks a month I'm happy to pay for peace of mind.
Be sure to check with some insurance companies/brokers that regularly deal with rentals. Some companies just don't really want to do it, so they charge through the nose.
Jean Bolger, 33 Zen Lane | http://www.solidrealestateadvice.com
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