Premises liability versus umbrella

[John Travis]

I’m closing soon on my first Single-Family rental home. Good chance my renter will have a section 8 voucher. At this point in the process it’s too late for me to form an Llc for the mortgage. I’m strongly advised not to quick deed a personal mortgage to an Llc after closing and was advised to get an umbrella policy. However my insurance agent recommended I just get 1 million in premises liability protection in lieu of the umbrella on the rental home insurance policy. It’s cheaper than an umbrella and supposedly would protect me.

[John Mocker]

John,
An Umbrella policy provides an additional limit (usually sold in $1,000,000 increments) that is triggered if the underlying limits are exhausted on your home, auto, rented dwelling, etc... It does not replace the underlying coverage (in this case the Liability on the premises) rather it supplements it.

Normally a requirement of the umbrella is that you have either $300,000 or $500,000 limits on the underlying policies (Auto, Home, Rental Dwellings, vacation homes, boats, etc...).