Commercial General Liability Insurance for Buy & Holds
Hi all!
When I purchased my 4th Buy & Hold property with my LLC my insurance broker suggested I consider getting a Commercial General Liability Insurance policy to further protect the properties and LLC. In total my properties are valued at around $1M and I am curious what sort of coverages everyone out there is getting for General Liability Insurance. Here is a rough breakdown of my quote of coverages:
General Aggregate
(Other than Products-Completed Operations): $4,000,000
Products-Completed Operations Aggregate: $4,000,000
Each Occurrence: $2,000,000
Personal and Advertising Injury: $2,000,000
Damage to Premises Rented to You: $300,000 Any One Premises
Medical Payments: $10,000 Any One Person
Hired Auto and Non-Owned Auto: $2,000,000 Each Occurrence
I am not concerned about the annual premium (under $350) I am just wondering what other investors out there are getting as far as coverage.
Thank you BP community!
@Matt Swope - As an agent, we see most investors taking $1M/$2M per dwelling/rental in GL coverage, and that's it. If they're in a more litigious area / state (CA, NY, NJ, etc.), then they may seek higher limits of liability ($2M/$4M), or opt for a $1M-$5M umbrella that sits over the top of their underlying limits of $1M/$2M. We write insurance for over 1,000 investors across the country and the large majority seem to be pretty comfortable with $1M/$2M per dwelling/rental. This especially holds true if the investor has less than 15 properties. Obviously, the more that number increases above 15 dwellings/rentals, the more likely that investor is to secure an umbrella policy for the added protection and peace of mind. Also, most investors seem to look for the umbrella policy as opposed to increased limits of liability to $2M/$4M. This is likely due to the fact that some carriers don't wish to offer a $2M/$4M limit option. Hope this helps.
@Bo Bond - Thank you for your experienced advice. I have $1M dwelling/rental policies for each property and this $4M GL policy would cover all 4 properties (so $1M per property). I am in NC and fairly new to the state so I am not sure how litigious an area/state it is. I do tend to be more cautious and the GL policy is fairly affordable plus my insurance broker says that the GL policy will lower my other premiums which will all but pay for the GL policy.
#2 Insurance Contributor
- Insurance Agent
- Nationwide
@Matt Swope $1M per occurrence/ $2M aggregate is the limit most commonly used for investors of your size. If they want higher limits, they will then add an Umbrella policy for another $1M. You are lucky in that your insurance carrier has the ability to increase the GL policy to $2M/$4M.
A few additional comments to give you a more complete picture of how the GL policy works;
1) Occurrence is the max amount the policy will pay out for any 1 claim. Aggregate is the max the policy will pay out in total before their obligation to you is fulfilled.
2) Chances are you have the $2M/$4M limit extended to EACH location. Double check but this is how most landlord policies read. You wouldn't have to worry that you only have $500k/$1M per each location.
3) The value of your properties does not have a direct correlation with how much GL exposure you have. A duplex worth $50k may actually have much more Liability exposure than a $1M Airbnb.
4) GL coverage on your 4 properties provides coverage against claims that occur on those 4 parcels. If you are doing business for others outside of those parcels, then you may have other exposures that a commercial GL policy can pick up. A commercial GL policy covers you throughout the continental US.
5) GL policies cover you for Property Damage and Bodily injury. If you want coverage for any of the following; Fair Housing, Wrongful eviction, Discrimination, Injured workers, Rented vehicles, etc., you would need to purchase additional policies