Insurance Agent in Baltimore City MD? Umbrella vs LLC

6 Replies

Requesting Referrals for an Investor friendly insurance agent in the Baltimore City, Maryland area for a Commercial Liability Umbrella Policy (CLUP).

Current portfolio: 8 Rentals

BRRRR investor - another question is how the properties (or level of difficulty) will be added/removed to the Umbrella as the properties go in my personal name and then refinanced into the LLC.

Bonus question - If refinanced to an LLC, do I still need an umbrella? Understand this may require additional personal info as it may be case by case.

Still attempting to learn and understand! Any and all info is greatly appreciated. Thanks in advance!

@Nat Rojas

Can't help you with a referral.. But,

It really shouldn't be that hard to add/drop properties to an umbrella policy. As far as transferring your properties into a LLC, its discussed just about daily here on BP (and I've posted on it a lot), but be very careful about doing it. There are a bunch of legal pitfalls that people seem to get into in my layman's opinion. Especially when it comes to protecting/maintaining your corporate veil.

If anything, you need to refinance in the llc with a commercial loan since you want everything underneath the purvue of the LLC. Otherwise, your limited liability isn't fully realized. Also, you may (consult with at least one qualified professinoal) make the LLC look like an alter-ego in my opinion. Also, refinacing and having a commercial umbrella policy are non sequitor's. You determine if you need the policy according to your investment strategy, assets in teh LLC, and risk tolerance. Are these residential or commercial properties? You know that the umbrella only is effective when there is a "base" liability policy, right? Also, the llc isn't a "magic bullet" that prevents you from being sued. It only limits the extent that your assets are liable if you lose the lawsuit. So, anything owned by the LLC can be gone after by the suitors (which is why you shouldn't have the mortgage in your name and Title in the LLC's name). The point being, you still need the insurance to protect the assets that are in the LLC. More importantly, you need the insurance so that the insurance company's lawyers will handle the lawsuit. Otherwise, you have to defend the lawsuit, in which case you might win the case but effectively lose all your assets because of legal fees.

So, you see whatever youare doing as a BRRR investor doesn't make sense? If you are going to use the LLC, Title should be in the LLC's name. Yes, that means you need to pay for commercial loans. If you want the asset protection/separation of the LLC, that's part of the price.

You really should consult with a few qualified professionals.  Good luck.

Originally posted by @David M. :

@Nat Rojas

Can't help you with a referral.. But,

It really shouldn't be that hard to add/drop properties to an umbrella policy. As far as transferring your properties into a LLC, its discussed just about daily here on BP (and I've posted on it a lot), but be very careful about doing it. There are a bunch of legal pitfalls that people seem to get into in my layman's opinion. Especially when it comes to protecting/maintaining your corporate veil.

If anything, you need to refinance in the llc with a commercial loan since you want everything underneath the purvue of the LLC. Otherwise, your limited liability isn't fully realized. Also, you may (consult with at least one qualified professinoal) make the LLC look like an alter-ego in my opinion. Also, refinacing and having a commercial umbrella policy are non sequitor's. You determine if you need the policy according to your investment strategy, assets in teh LLC, and risk tolerance. Are these residential or commercial properties? You know that the umbrella only is effective when there is a "base" liability policy, right? Also, the llc isn't a "magic bullet" that prevents you from being sued. It only limits the extent that your assets are liable if you lose the lawsuit. So, anything owned by the LLC can be gone after by the suitors (which is why you shouldn't have the mortgage in your name and Title in the LLC's name). The point being, you still need the insurance to protect the assets that are in the LLC. More importantly, you need the insurance so that the insurance company's lawyers will handle the lawsuit. Otherwise, you have to defend the lawsuit, in which case you might win the case but effectively lose all your assets because of legal fees.

So, you see whatever youare doing as a BRRR investor doesn't make sense? If you are going to use the LLC, Title should be in the LLC's name. Yes, that means you need to pay for commercial loans. If you want the asset protection/separation of the LLC, that's part of the price.

You really should consult with a few qualified professionals.  Good luck.

 Hi David!

Thank you so very much for the detail. I'm rereading the message to ensure I capture the full understanding!


It's interesting you mentioned "transfer". I was under the impression the only way to accomplish this is to refinance into the LLC. If I understand your response, you are saying the best way to ensure the LLC is fully realized and prevent a discrepancy (Mortgage in my name and title in LLC's name, is to refinance. Then, yes! I'm tracking. The LLC was created (in all honesty) with the main focus to refinance into.

Could you elaborate on "make the LLC look like an alter-ego in my opinion"?

Yes - the "base" policy is my Home Owners/Rental Insurance policy, right?

All residential properties - Row homes (townhomes) in Baltimore City. My strategy is to continue in the residential space for the time being

To summarize - Even after the refinance in the LLC, I still need insurance. To your point, my investment strategy, assets in the LLC, and risk tolerance determine if I need an umbrella and amount of that policy, right?

@Nat Rojas

Yeah, that's actually one of my "short" versions.  Check out some of my other posts, or I'm happy to chat so direct message if you want and we can figure a time.

Yes, as far at "transfer," just about "everybody" who does it just quit claim deeds the property into their LLC. That potentially messes with your Title insurance policy, Due on Sale Clause, update your landlord insurance (which may automatically inform the note servicer that a transfer occurred), etc. So, you would deed the property over then refinance with commercial financing. That would get everything together.

Yes, the base policy is your homeowner's/landlord policy.  That already has liability coverage.

According to your situation and personal preference, you might decide to 1) just go holding Title in your personal and and using insurance and umbrella policy, 2) holding Title in the LLC and having insurance and (maybe) an umbrella policy.

The "alter-ego" aspect is basically using the LLC as an extension of yourself. Again, this is all legal stuff and probably varies by State. The legal entity is supposed to be its own entity, separate from yourself. I think of it as if I non-biologically created another "person" when I form a LLC. It has its own EIN (equivalent to a Social Security #), bank account, even a unique name. So, when you start doing business and a third party can't distinguish between you and your/the entity, its your "alter-ego." For example, generally people take lots of deductions on their LLC. Everybody knows that and its generally fine for a tax audit. However, I THINK from a legal standpoint, it can start to look like an extension of yourself, ie your "alter-ego." For example, what if your LLC purchased a bunch of new smartphones for your friends and family. That's a nice deduction which you could probably come up with some argument to the tax auditor why its a legitimate business expense. But, legally it could start looking like you just are using the LLC to run personal expenses through it to make deductions.

A more specific example, you see it all the time in BP where investors transfer Title from their LLC to their personal name, refi with cheaper conforming residential financing, then deed Title back to the LLC. If this were regular arms length transactions, how in the world would that work, especially without any paper? Let say it was you and me doing this. So, I would just deed you the Title to my property (no cost)... and trust you can get good financing.. and trust that you would deed it back to me (at no cost)... and you trust me that I would make all your mortgage payments (sort of like a subject-to transaction as best I know them). Personally, I think that's pretty crazy.

Like I've said, I'm not a laywer...  I haven't heard different from a lawyer on BP...  So, to me this just makes sense.

I hope this helps.  Good luck.


Originally posted by @Nat Rojas :
Originally posted by @David M.:

@Nat Rojas

Can't help you with a referral.. But,

It really shouldn't be that hard to add/drop properties to an umbrella policy. As far as transferring your properties into a LLC, its discussed just about daily here on BP (and I've posted on it a lot), but be very careful about doing it. There are a bunch of legal pitfalls that people seem to get into in my layman's opinion. Especially when it comes to protecting/maintaining your corporate veil.

If anything, you need to refinance in the llc with a commercial loan since you want everything underneath the purvue of the LLC. Otherwise, your limited liability isn't fully realized. Also, you may (consult with at least one qualified professinoal) make the LLC look like an alter-ego in my opinion. Also, refinacing and having a commercial umbrella policy are non sequitor's. You determine if you need the policy according to your investment strategy, assets in teh LLC, and risk tolerance. Are these residential or commercial properties? You know that the umbrella only is effective when there is a "base" liability policy, right? Also, the llc isn't a "magic bullet" that prevents you from being sued. It only limits the extent that your assets are liable if you lose the lawsuit. So, anything owned by the LLC can be gone after by the suitors (which is why you shouldn't have the mortgage in your name and Title in the LLC's name). The point being, you still need the insurance to protect the assets that are in the LLC. More importantly, you need the insurance so that the insurance company's lawyers will handle the lawsuit. Otherwise, you have to defend the lawsuit, in which case you might win the case but effectively lose all your assets because of legal fees.

So, you see whatever youare doing as a BRRR investor doesn't make sense? If you are going to use the LLC, Title should be in the LLC's name. Yes, that means you need to pay for commercial loans. If you want the asset protection/separation of the LLC, that's part of the price.

You really should consult with a few qualified professionals.  Good luck.

 Hi David!

Thank you so very much for the detail. I'm rereading the message to ensure I capture the full understanding!


It's interesting you mentioned "transfer". I was under the impression the only way to accomplish this is to refinance into the LLC. If I understand your response, you are saying the best way to ensure the LLC is fully realized and prevent a discrepancy (Mortgage in my name and title in LLC's name, is to refinance. Then, yes! I'm tracking. The LLC was created (in all honesty) with the main focus to refinance into.

Could you elaborate on "make the LLC look like an alter-ego in my opinion"?

Yes - the "base" policy is my Home Owners/Rental Insurance policy, right?

All residential properties - Row homes (townhomes) in Baltimore City. My strategy is to continue in the residential space for the time being

To summarize - Even after the refinance in the LLC, I still need insurance. To your point, my investment strategy, assets in the LLC, and risk tolerance determine if I need an umbrella and amount of that policy, right?


Great information from David.  


I can't help you with any local agents in the Baltimore area, but I would start with looking for an independent insurance agent because they will have more carriers to quote you out with.

I can speak to the umbrella question. You will need to find out if your umbrella policy will be allowed to go overtop of your rental dwelling. In my states (PA and OH) it depends on your carrier if they will allow you to go overtop of the rentals or not. Also, some carriers have a limit of how many rental dwelling they will allow the umbrella to go over (your current homeonwer/renters insurance agent should be able to tell about this). The other issue that is going to arise will be you transferring them into your LLC. I would speak to your current homeonwer/renters insurance agent you are looking to get the umbrella policy through. They might not allow you to have the umbrella policy cover the properties that will be in your LLC's name (check with your agent). If they don't allow the umbrella to go overtop of the rental dwellings then you need to get insurance for the properties on a commercial policy. I would recommend you do this regardless of if you have an LLC or not because you are not only insuring from a liability standpoint, but can also insure it from a building/dwelling standpoint if something happened to the building.

Hope this helps, but you should definitely find an independent insurance agent in your state that's licensed and they will be able to help you as each state is different with the laws and rules.