Hello - I bought a rental property (single family home) on my name and would like to transfer it to an LLC with 3 Members. This is in the state of Texas. The members are myself, my own brother and a best friend. The insurance policy is current on my name. The question is:
Can i get an insurance that's NOT commercial and have the LLC listed as the "Name Insured" ? And also, should the policy have all the individual members of LLC listed on the policy ? Would the insurance company allow that ?
I have talked to insurance agents here and unable to get a clear answer. I would appreciate if you all can shred some light on this. Thanks in advance.
I have rentals in Montgomery, AL and use State Farm. They are all owned by an LLC and insured as such. I don't believe that should be an issue. Hopefully, someone from TX can recommend a company that they use. Insurance rules are state-specific but still don't see where there should be an issue. Best wishes.
Hello - I bought a rental property (single family home) on my name and would like to transfer it to an LLC with 3 Members. This is in the state of Texas. The members are myself, my own brother and a best friend. The insurance policy is current on my name. The question is:
Can i get an insurance that's NOT commercial and have the LLC listed as the "Name Insured" ? And also, should the policy have all the individual members of LLC listed on the policy ? Would the insurance company allow that ?
I have talked to insurance agents here and unable to get a clear answer. I would appreciate if you all can shred some light on this. Thanks in advance.
Generally, insurance on property that has been put in trust or has been transferred to an LLC can be handled in one of two ways: The LLC or trust can either be the "named insured" on the policy or it can be the "additional insured
or additional interest” on the policy of the person(s) who placed the property in trust or transferred ownership to an LLC.
There are advantages and disadvantages to each option. If the trust or LLC is the named insured on the policy, the advantage is that there is more complete separation between the trust/LLC and the beneficial owners, who for sake of
clarity in this explanation we’ll call the Smiths. If the trust or LLC pays the insurance premium, this is consistent with its ownership of the property and maintains the separation of the asset in the name of the trust/LLC and the protections that go with that separation. In addition, if the trust or LLC is the named insured on the policy, an insurance
advisor should be aware that the Smiths may have to purchase renters insurance to provide coverage for their personal belongings and personal liability insurance if they do not have this coverage extended from another
location or policy.
When a trust or LLC is named an "additional insured or additional interest" on the policy covering the property, the
Smiths remain as the name insureds and there should not be a need for a separate renter’s policy or personal liability policy for the property. The downside is that there is not true separation between the Smiths and the legal entity that actually owns the property, which may create risks the Smiths sought to avoid when placing the ownership of the property in the trust or LLC. Trusts and LLCs owning property must be protected for other risks beyond the usual property and liability risks associated with home ownership. Often times, an LLC will employ domestic staff to maintain the residence premises. LLCs employing domestic staff will need proper coverage for employment liability exposures. EPLI insurance is
designed to protect employers, whether they are entities or individuals, against lawsuits filed by employees. A special note, if a home owned by an LLC or trust is used as a commercial enterprise (income generation or business enterprise), the LLC or trust will need commercial coverage. Other uses of properties for the purpose of ranching, farming or wine-growing, will require additional specialized coverage on that location. Mainstream insurance companies typically don’t have the knowledge or expertise to deal with the challenges of protecting property owned by trusts and LLCs.
Hello - I bought a rental property (single family home) on my name and would like to transfer it to an LLC with 3 Members. This is in the state of Texas. The members are myself, my own brother and a best friend. The insurance policy is current on my name. The question is:
Can i get an insurance that's NOT commercial and have the LLC listed as the "Name Insured" ? And also, should the policy have all the individual members of LLC listed on the policy ? Would the insurance company allow that ?
I have talked to insurance agents here and unable to get a clear answer. I would appreciate if you all can shred some light on this. Thanks in advance.
Generally, insurance on property that has been put in trust or has been transferred to an LLC can be handled in one of two ways: The LLC or trust can either be the "named insured" on the policy or it can be the "additional insured
or additional interest” on the policy of the person(s) who placed the property in trust or transferred ownership to an LLC.
There are advantages and disadvantages to each option. If the trust or LLC is the named insured on the policy, the advantage is that there is more complete separation between the trust/LLC and the beneficial owners, who for sake of
clarity in this explanation we’ll call the Smiths. If the trust or LLC pays the insurance premium, this is consistent with its ownership of the property and maintains the separation of the asset in the name of the trust/LLC and the protections that go with that separation. In addition, if the trust or LLC is the named insured on the policy, an insurance
advisor should be aware that the Smiths may have to purchase renters insurance to provide coverage for their personal belongings and personal liability insurance if they do not have this coverage extended from another
location or policy.
When a trust or LLC is named an "additional insured or additional interest" on the policy covering the property, the
Smiths remain as the name insureds and there should not be a need for a separate renter’s policy or personal liability policy for the property. The downside is that there is not true separation between the Smiths and the legal entity that actually owns the property, which may create risks the Smiths sought to avoid when placing the ownership of the property in the trust or LLC. Trusts and LLCs owning property must be protected for other risks beyond the usual property and liability risks associated with home ownership. Often times, an LLC will employ domestic staff to maintain the residence premises. LLCs employing domestic staff will need proper coverage for employment liability exposures. EPLI insurance is
designed to protect employers, whether they are entities or individuals, against lawsuits filed by employees. A special note, if a home owned by an LLC or trust is used as a commercial enterprise (income generation or business enterprise), the LLC or trust will need commercial coverage. Other uses of properties for the purpose of ranching, farming or wine-growing, will require additional specialized coverage on that location. Mainstream insurance companies typically don’t have the knowledge or expertise to deal with the challenges of protecting property owned by trusts and LLCs.