Umbrella Insurance Policy?
Hi! We have 9 rental properties in the Dallas Texas area. And are thinking about getting an umbrella policy on top of our insurance. Do you find that this is a good idea and if so what is a good company to use?
Also one of our houses is a trailer and the insurance I have been quoted is about 4 times more than our other houses. Is there a company out there who insures trailers at a reasonable price?
I was wondering if anyone had any insight into these two questions.
Thank you!
Interesting that USLI is an option to get around the 4 unit limit, since they're a Berkshire-Hathaway Co, just like GEICO (which limits to 4 units!).
Not only is a commercial umbrella more expensive than a personal one it will also not allow your primary to be covered and needs higher individual limits (Statefarm).
I have the same problem with 6 properties now and will have to look for another provider.
I have a 3M umbrella with GEICO, but the other day got a letter from GEICO underwriter that they now need at least 2 of my rentals in separate LLCs, or they will not renew in Jan. Ca LLCs are insanely expensive; 800/yr registration, 15.3% for social security and 2.9% for Medicare based on net distributed income, business license $50-100/yr, a registered agent for each, then their own insurances & mine, plus CPA quarterlies, separate Fed & state tax filings, etc.
This is in addition to possible Fed & state taxs due to sale to LLC (changing title) and possible loan acceleration.
Seems like they don't want me as a customer.
I think I need a commercial co, since I'm passed a 4 rental limit and only got the GEICO on a waiver many years back.
Sooo, any recommendations for umbrella ins. co doing business in Ca. at the 5M level for more than 4 SFRs?
I've got a query into my CPA & insurance guy. But I think insurance guy does not deal in the commercial side, only residential side.
#2 Insurance Contributor
- Insurance Agent
- Nationwide
@Cam Coplin & @nick Soral, I did a commercial $1M umbrella quote for 3 locations in TN and 1 in CA for $400 per year. You can have personal names and LLC's on the same umbrella. I'll PM you the info.
My insurance agent finally got back to me with a quote of ~$1K to cover 6 SFRs at the 5M level. I'm currently evaluating it.
#2 Insurance Contributor
- Insurance Agent
- Nationwide
@Cam Coplin There is a 95% chance that is a program I use as well. I'll PM you some spec's for you to qualify it.
It's up to each individual investor as to how much coverage they feel they need for each location. With SFR, you have a good spread of risk, so the chance of a $5M claim coming in from one SFR is pretty low.
If your 6 units was in a single property, you do something wrong and you have 6 households suing you, much easier to get to $5M.
Originally posted by @James Park:I am having issues with my umbrella as well. Allstate only allows 4 rentals and will not make exception for a 5. I have my 5th landlord policy with State Farm . Does it make sense to have an umbrella with both Allstate and State Farm?
One legal counsel told me that a $2M umbrella is all that needed and an LLC is not necessary.How many of you just have an umbrella without LLCs? Do you agree me with what my legal counsel is saying?
Hey James - I hope all is going well. You are getting to a point where you need to start working with a commercial insurance broker to place your coverage. You will get better coverage and at a lower cost most of the time. LLC's for each property will just be listed as Named Insureds. I would recommend you keeping the Umbrella policy. Send me a DM for questions. I'm a commercial insurance broker that only works with investors and developers. Best of luck.
Is it a fair assumption to say that if your insurance company ever pays a claim with your umbrella policy they will then cancel your umbrella policy after? Do you think that a person in this scenario would ever be able to get another umbrella policy with another insurance company? Anyone have experience with this?
#2 Insurance Contributor
- Insurance Agent
- Nationwide
@Eddie Knoell depending on how much and why your Umbrella policy paid out would be the determining factors. Not for the sole reason that there was a claim.
Yes, you would be able to get coverage again, but chances are the premium would be 2-3 times the amount you were previously paying.
Eddie Knoell
Yes, I've had a client with a full limits payout, $3mm. They then had to pay another $2.5mm out of pocket (the husband was a hedge fund trader, so not devastating, but hurt). We offered up to $50mm in coverage, especially considering their assets.
The loss is what you would term a "shock loss" they did nothing to contribute to it, the did mismanage a subcontractor, but nothing too bad, the insurer paid it out and continued on the policy for about triple the price, and the raised coverage to $20mm (with the pricing of an umbrella being so low, does it really matter if it's 10x's the cost if you need the coverage).
BTW it was in an LLC, the judge (northeast US) decided it was good for public policy to make them personally liable since as members of the LLC they personally decided to not purchase enough insurance.
I just got a quote for an 1M umbrella policy that covers my primary residence and 1 duplex rental in Philadelphia for almost $550 a year. I have read that an 1M umbrella policy would be around $200??? Is my quote too high or have things changed?
My personal liability is 500k and rental liability is 300k.
@Giang Nguyen I pay $250/year for a $1M umbrella policy. Feel free to message me and I will give you my insurance brokers contact information since we are in the same market.
My personal umbrella will not cover my rental properties so I had to get a commercial umbrella policy.
Hi all, I finally put my toe in the "umbrella" water, but am not sure what I'm being quoted. Instead of a single Umbrella Policy for my LLC, my broker came back with premium increases to increase liability limits by $1,000,000 on each of the properties. $420 each for my 3 & 4 families that cost ~$2k, $705 for the small commercial that currently costs ~$4k
Did he misunderstand me, or is this how it is done for an LLC holding multiple properties each with a separate policy?
Umbrella policies usually require that you have a minimum coverage on your other assets. Are you sure you weren't/aren't under insured?
The reason for the minimum coverage is to prevent someone from utilizing the umbrella as their "main" insurance by getting minimums on their other policies. So, personal umbrella policies also cover you when you are driving your car. You can't get a state minimum car insurance policy for like $300 per year and then get a $1mm umbrella policy for $300. The umbrella policy will require, at least from my experience, at least $300/$500k/$300k limits on your auto insurance to qualify for the umbrella policy. Same thing for landlord/homeowners policies. You can't get the absolute minimum coverage and utilize the $1mm of coverage from the umbrella. The umbrella will require that you have a minimum amount of coverage on those policies.
Shop your quote around to make sure that you're getting an accurate quote. If everyone is coming back requiring you increase your coverage on the other policies, you may want to take a step back to evaluate if you are properly insured.
Originally posted by @PJ M.:
Umbrella policies usually require that you have a minimum coverage on your other assets. Are you sure you weren't/aren't under insured?
Sorry I missed that you replied. This is confusing. I don't believe I'm under insured, I'm paying $8k/yr for 14 units in 3 rowhouses. In any case I was not offered an "umbrella policy" per se, just upgrades to each individual policy. Also, this is for an LLC, not a "personal umbrella".