Rental Property: LLC or liability insurance?

Question

I'm interested in hearing different views in protecting myself if I'm sued.Thanks

Patrick Reagan · Answer

John and Nathan,thanks so much for your views.Great feedback. Any suggestions as to the specific way the LLC should be structured?

Nathan Gesner · Answer

First off, don't sweat it too much. It is rare that owners are sued. The average settlement for someone being sued is well below the limit of your standard insurance policy. So the risk of being sued is slim and the risk of your insurance not covering it is even slimmer. Your best protection is to obey the law and treat your tenants honestly and fairly.

That said, an umbrella policy is simpler to put in place and easier to manage. The LLC provides a layer of anonymity and protection but both can be pierced if you don't do things correctly.

John Warren · Answer

@Patrick Reagan they do different things. The insurance policy protects you as a first line of defense if you get sued. The LLC limits your losses to only losing what is in it. That still would be horrible though.... I personally do both and have an umbrella policy in addition to a strong insurance policy on each of the properties I own.