Liability protection as a landlord

[Vanesa Gonzalez]

Hello,

Most of my rentals are under a company's name, an LLC. But I also have a couple under my name and because I used a conventional loan thats was the only option.

I am now in the process of restructuring/organizing my business and just realized how exposed I am as a landlord! What kind of insurance should I have as a landlord? I am only interested in the liability aspect.

Thank you all so much! 

[Nathan Gesner]

Vanesa, the point of putting property under an LLC is to protect you should someone sue. If a tenant living in a property owned by ABC LLC sues you, they can only sue the assets held by ABC LLC and not the assets owned by you personally or under a different LLC. It "limits your liability" to what is contained within that LLC. But you could still lose the property within that LLC.

Another option is an umbrella policy. If the Tenant sues you and the umbrella policy covers their claim, none of your assets are touched. If you have a $2 million umbrella and the tenant sues for $1 million, the policy will cover it and all your assets are safe, including the assets within the LLC that the tenant resides in. So an umbrella policy can actually protect you better than an LLC.

Umbrella policies are inexpensive and require less effort than an LLC.