Umbrella Policy Ammount

10 Replies

What are everyone's thoughts on what would be a good amount of insurance to carry with four single family rental homes?. We have had a $1 million umbrella policy for many years along with $300k liability on each property and I am trying to decide if that is enough coverage to make me feel comfortable or if I should bump it higher. The properties are all good quality in nice areas and we are pretty diligent about making sure we take good care of them so I feel that my risk is relatively low but I am curious to hear what others have to say. Any specific examples of suits that have breached the $1 million mark?

I know I can get additional protection with an LLC but so far I have stayed away from that option mainly just because of the potential difficulty for financing future deals and/or transferring my existing properties with mortgages into the LLC.

Look at prices.  Often it is negligible to bump it up.  Double or triple the umbrella coverage might only cost 10% more.....reason being it is rarely used and even then, used completely.  Just don't go overboard and pay too much to overinsure yourself.  I think I have $3 million right now. 

Yeah good point. I will get my insurance agent to quote a $2 million policy and see how much that would cost me. 

It seems like asset protection gets discussed on here a lot and I am totally in the better safe than sorry camp but I am really curios to hear about peoples experiences with having to use that protection. Obviously its a touchy subject and I am sure a lot of the details cant be posted for legal reasons but is anyone willing to share if they have been sued and why?

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@Chris Propes I spoke to my broker about this just last week. The home we own we carry $300k liability. Once I get to three properties I plan to drop the liability coverage on each property and get a single General liability policy for $2mm ($1mm per occurrence and $2mm total per year). With more properties I would add a higher level of coverage.

Based on what I've seen, your current coverages definitely are adequate.

@Chris Propes , how many properties are in your portfolio right now? I think the answer to that will help make for a better conversation. Additionally, I starting a forum discussion called LLC Set-up: Lawyer or do it yourself. You should check it out for some insight into the LLC side of your asset protection

@Chris Propes , I would suggest $2M as a starting point for the conversation.  Check out the premium differences btw that and $3M.  If you are serious about getting number 5 soon, just set it in place now and it is one less thing to worry about then.  Let us know what your insurance guy tells you regarding premiums, etc...  That will help inform other folks on the site moving forward!!

I do the exact same thing for small scale landlord insurance/risk management (and use RLI for the umbrella). And the cost for the jump from 1 million to 2 million to 3 million is approximately a couple of hundred bucks at each level for me the last few renewals (but probably much depends on your carrier, area, and risk profile--I am boring no jet skis, farmland, tickets, dwi, not a public figure or rock star)... Can be good piece of mind for a reasonable cost to up the coverage (prudent as mentioned to also consider your assets and risks)...Best of luck

I have $2mm on each entity and a personal umbrella of an additional $1mm.  The balancing act is to not have so much that you look attractive to a lawyer while still covering actual/potential liability.  

I have been doing this for 26 years with 87 doors in 3 entities and have yet to be sued. Being professional in interactions with actual and prospective tenants and caring for maintenance issues are your best protections against a lawsuit.

How much is everyone's Umbrella policy a month? I'm just curious if the prices change depending on the area they are in. Plus I'm looking to compare rates.