Property Insurance Questions & Discussions

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Mike Berry
  • Investor
  • Youngstown, OH
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4 plex insurance question that is in an LLC.

Mike Berry
  • Investor
  • Youngstown, OH
Posted Jul 13 2022, 07:08

my wife and I are the 2 principals in our LLC that owns a 4 plex. We also reside in 1 unit of the building. We are currently getting building insurance quotes, but we are currently on a business policy with Nationwidwe insurance.

Mationwide lists us as the policy holders, not the LLC. Is this legal or de we need to put policy in LLC's name?

Akron, Ohio

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Replied Jul 13 2022, 07:44

You will need a new policy with the LLC as the named insured. I would get a separate renters policy in your personal name for your personal property in your unit as well.

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John Mocker
  • Insurance Agent
  • Norwalk, CT
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John Mocker
  • Insurance Agent
  • Norwalk, CT
Replied Jul 13 2022, 08:45

Mike,

The LLC is the Owner of the Property and should be the first named insured on the policy. Check with your atty to see if your names being on the policy will weaken the LLC protection. Further, you may be able to find a company that will Insure the property under a 4 family homeowners policy. As long as there are no outside LLC members and the LLC has no other operations some companies will write the Homeowners. I would seek out an Independent Insurance Agent with multiple markets if you want to pursue this option. They will need to find a company that will insure a 4 family and will do so with the LLC ownership.

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Jason Bott
  • Insurance Agent
  • Milwaukee, WI
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Jason Bott
  • Insurance Agent
  • Milwaukee, WI
Replied Jul 14 2022, 08:14

I agree with @Matthew Ollis and @John Mocker and would add;

Ideally you want the LLC as the Named Insured (the name that shows on dec pages and invoices). If you can't do that, at a minimum you need the LLC added as an Additional Named Insured. If the LLC is not on the policy, you leave the door open for the insurance company to not respond to a lawsuit against the LLC.

If you get a new policy with the LLC as the Named Insured, you will want a Renters policy to provide coverage for your personal belongings not owned by the LLC. In addition, a Renters policy will provide you Personal Liability coverage for suits against you personally. Example - You own a dog that bites another tenant in this 4 unit. The LLC would not respond to that lawsuit, but your Renters policy would.

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David M.#1 Creative Real Estate Financing Contributor
  • Morris County, NJ
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David M.#1 Creative Real Estate Financing Contributor
  • Morris County, NJ
Replied Jul 14 2022, 12:02

@Mike Berry

As an extension, you should review all of your "operations," usually preferably with a qualified professional or two. If you want the limited liability protection of the LLC, you need to operate the LLC as its own separate legal entity, which is what it is. EVERYTHING from checking, payments, receivables, etc should be done under the LLC's purvue.

FYI:  its not normally advisable to hold your primary residence in a legal entity.

Good luck.