Umbrella Policy Issue

Umbrella Policy Issue

New to Real Estate · NY · Member since 2015 · 119 posts · 36 votes

Afternoon BP,

I fear that I know the answer to my issue but want to get the advice of someone who is an expert in the Insurance game. The exciting part is that I am a first-time investor and am in the process of closing on my first ever investment property. I am currently living in NY and am in the option period on a SFH in Texas that will be used as a rental property Investment, that's the good news.

From what I've learned and researched, it is "standard" and smart that I should have an umbrella policy to cover myself for any liability issues that come along with owing a property with renters, here lies the start of my problem. Currently I am living with my in-laws. What I suddenly found out today after attempting to get an umbrella quote is that I cannot get an umbrella policy if I currently do not have homeowners or renters' insurance. Something that may seem like I should have known but am learning about now. The reason I don't have either is that my wife and I are currently house hunting for our own home here in NY and in the meantime, we were fortunate enough that my in-laws are allowing us to stay with them till we do find a home.

My issue now is that I cannot get a quote or a policy. If there is someone out there with the knowledge or can provide advice on how to or if there is even a way to work around this, I would appreciate any and all feedback.

One of the ideas I did have was that currently my mother lives in NY as well and has an apartment that she has renters' insurance on. Would I be able to add myself to that policy which would then allow me to get the umbrella?

Appreciate any help as I don't want this to derail my first RE investment purchase.

Thank you!

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Colleen F.Pro Member

Investor · Narragansett, RI · Member since 2013 · 8k+ posts · 4k+ votes

2y

@Marc S. Get an umbrella policy quote from the person who wrote you landlord policy is the simpliest thing to do. Use an independent insurance agent to get a quote.

See this reply in the discussion

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Chris SeveneyBusiness Member
Moderator
Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
2y
@Marc S.
That doesn’t seem right - once you get a policy on the house you are buying you can add umbrella to it….
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Marc S.
OP
New to Real Estate · NY · Member since 2015 · 119 posts · 36 votes
2y
@Chris Seveney. I have no plans to get an insurance policy on the rental property as a requirement of the lease is that the tenant obtains renters insurance and currently does. If that answers your question.
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Marc S.
OP
New to Real Estate · NY · Member since 2015 · 119 posts · 36 votes
2y
Quote from @Chris Seveney:

@Marc S.
That doesn’t seem right - once you get a policy on the house you are buying you can add umbrella to it….

I also believe, but correct me if I'm wrong, since I'm not living there, I wouldn't be able to get a policy.
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David M.
Morris County, NJ · Member since 2020 · 5k+ posts · 2k+ votes
2y
@Marc S.
No, you can't just go adding yourself to other people's policy's. One of the fundamental principals of insurance is having an "insurable interest."
When getting a quote for the homeowner's/landlord insurance policy they should be able to give you a quote for the umbrella policy.
1 Reply
Marc S.
OP
New to Real Estate · NY · Member since 2015 · 119 posts · 36 votes
2y
Quote from @David M.:

@Marc S.
No, you can't just go adding yourself to other people's policy's. One of the fundamental principals of insurance is having an "insurable interest."
When getting a quote for the homeowner's/landlord insurance policy they should be able to give you a quote for the umbrella policy.
This is where I'm getting a bit confused. I can get an umbrella policy based off my landlord policy? I am under the impression I cannot do that, being that the landlord policy is in Texas and that I need to get an umbrella policy from NY where I'm currently living, but I don't have any property to get it off of.
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Adam Martin
Rental Property Investor · Member since 2020 · 1k+ posts · 1k+ votes
2y
I think you may have some misunderstandings of what insurance covers.
The renters insurance covers their personal belongings and accidental damage. I was able to file a renters insurance claim when they disconnected their washing machine on move out and it flooded and their company paid for it. Had it not been the tenants fault and it was just a leak I'd be on the hook.
Landlord insurance is similar to homeowners insurance but less expensive since it does not cover as much. I only have 5k in personal property on my policy to cover appliances so the insurance company has less risk property wise but they are also covering my liability. If you intend to finance the property there is no way you aren't going to be forced to buy this. If you are paying cash but don't feel like you can afford insurance you are not in a position to afford not to have it. If you do not have this you are at risk where if your property is damaged through natural disasters such as hail and tornado's, household issues like electrical fires, or vandalism in many if not most policies as well as liability issues.
A umbrella policy is built to supplement your landlord policy. My landlord policy covers the first 500k in claims and if it goes over this the umbrella kicks in for another 1.5 Mil. These are inexpensive policies since they are just a supplement to your regular insurance and I have to assume rarely used.
I hope this helps clear things up for you, insurance is confusing but necessary to have the proper understanding to protect yourself.
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Marc S.
OP
New to Real Estate · NY · Member since 2015 · 119 posts · 36 votes
2y
I guess the question is, can I get an umbrella policy being that my landlord insurance is on an out of state investment and it seems like I need to have some type a homeowner's insurance on a piece of property that I actually live in first, being that the definition of umbrella policy is to supplement an already existing insurance policy?
I feel I am checking off a box of .0001% of investors, being that 99% of people have a home insurance or renters' insurance and don't live rent free in someone else residence. This is very frustrating...
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Marc S.
OP
New to Real Estate · NY · Member since 2015 · 119 posts · 36 votes
2y
Quote from @Adam Martin:

I think you may have some misunderstandings of what insurance covers.
The renters insurance covers their personal belongings and accidental damage. I was able to file a renters insurance claim when they disconnected their washing machine on move out and it flooded and their company paid for it. Had it not been the tenants fault and it was just a leak I'd be on the hook.
Landlord insurance is similar to homeowners insurance but less expensive since it does not cover as much. I only have 5k in personal property on my policy to cover appliances so the insurance company has less risk property wise but they are also covering my liability. If you intend to finance the property there is no way you aren't going to be forced to buy this. If you are paying cash but don't feel like you can afford insurance you are not in a position to afford not to have it. If you do not have this you are at risk where if your property is damaged through natural disasters such as hail and tornado's, household issues like electrical fires, or vandalism in many if not most policies as well as liability issues.
A umbrella policy is built to supplement your landlord policy. My landlord policy covers the first 500k in claims and if it goes over this the umbrella kicks in for another 1.5 Mil. These are inexpensive policies since they are just a supplement to your regular insurance and I have to assume rarely used.
I hope this helps clear things up for you, insurance is confusing but necessary to have the proper understanding to protect yourself.

Thank you for clearing that up @Adam Martin. But if you see my post after yours, I feel like I didn't ask the right questions when I called Geico, who I have my auto insurance with or I didn't make it clear that I have a landlord insurance policy. So what you're saying is that I can call them, tell them I have a landlord policy (which I do with Steadily) and they will give me a quote on an umbrella policy?
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David M.
Morris County, NJ · Member since 2020 · 5k+ posts · 2k+ votes
2y
@Marc S.
I know you can have an umbrella policy effective cross states, specfically NY / NJ
No, there are investors who own rentals but not a primary...
Landlord insurance is a homeowner's policy. The term seems to be region specific. In NJ my comany still calls it as homeownerr's policy. Just a different policy clause, or whatever, is applied.
Maybe you are just asking the wrong question or explaining it incorrectly to the insurance agent??? Or try some other insurance companies, but I though the regular national companies could do it.
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David M.
Morris County, NJ · Member since 2020 · 5k+ posts · 2k+ votes
2y
@Adam Martin
Oh, you already have the property? And you have an existing policy? Then, you should be able to get the umbrella. My "primary" insurance has the umbrella but only will underwrite a few rentals. So, I have my rental insurance under another company. But my umbrella covers them all.
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Marc S.
OP
New to Real Estate · NY · Member since 2015 · 119 posts · 36 votes
2y
Well, I don't have it, I'm under contract with a closing date in January.
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David M.
Morris County, NJ · Member since 2020 · 5k+ posts · 2k+ votes
2y
@Marc S.
So, what is the existing landlord policy with Steadily that you mentioned?
0 Reply
Marc S.
OP
New to Real Estate · NY · Member since 2015 · 119 posts · 36 votes
2y
@David M.
It's for the property I'm buying. Maybe I didn't convey that properly to Geico when I called for a quote.
0 Reply
David M.
Morris County, NJ · Member since 2020 · 5k+ posts · 2k+ votes
2y
@Marc S.
So, if its for the property that you are buying.. you don't currenly have a policy with Steadily? Or, did you already pay/start the policy before you purchased (not common since its usually done at closing, but I've seen some people do that...)
Never worked with Geico, but perhaps they aren't used to this, especially since you are setting up a "future event."
Well, give them a call tomorrow and find out again? Any reason Geico wouldn't give you a landlord policy?
0 Reply
Mike MalyyPro Member
Investor · Sacramento, CA · Member since 2019 · 44 posts · 38 votes
2y
@Marc S. I am in California and in similar situation as you, owning a couple of rentals but not having any insurance on my primary residence as I live in someone else’s home rent free. I have GEICO umbrella policy (through RLI), as well as landlord policies (through Travelers) so can confirm that they will underwrite umbrella policies without primary residence insurance in place. However not sure if that would be the same case for OOS, and also not sure if they will do it while your landlord policy is underwritten by a different company. Good luck.
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Elizabeth Goff
Investor · Napa, CA · Member since 2016 · 100 posts · 53 votes
2y
Quote from @Marc S.:

@Chris Seveney. I have no plans to get an insurance policy on the rental property as a requirement of the lease is that the tenant obtains renters insurance and currently does. If that answers your question.

You **absolutely** need a landlord insurance policy on the building as well (and this also includes some liability coverage usually). Renter's insurance only covers the renter's belongings and and damage that they do with negligence (eg leaving the bathtub running). If the house burns down or otherwise, YOUR insurance is what covers that incidence. Or if anyone is injured on the property that would also be covered within the limits.
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Ryan KellyBusiness Member
Real Estate Broker · Austin, TX · Member since 2018 · 1k+ posts · 1k+ votes
2y
@Marc S. you may simply be jumping too many steps ahead since you haven't yet closed on the purchase. At this point, you don't yet own the property you are working to insure. I recommend you first complete the purchase and get the landlord policy active (the date you own the property). You can then shop with that carrier and other carriers for umbrella policy options. Not all carriers will offer one, so you want to shop for options. Hope this helps.
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Colleen F.Pro Member
Investor · Narragansett, RI · Member since 2013 · 8k+ posts · 4k+ votes
2y
@Marc S. Get an umbrella policy quote from the person who wrote you landlord policy is the simpliest thing to do. Use an independent insurance agent to get a quote.
2 Reply
Marc S.
OP
New to Real Estate · NY · Member since 2015 · 119 posts · 36 votes
2y
Quote from @Colleen F.:

@Marc S. Get an umbrella policy quote from the person who wrote you landlord policy is the simpliest thing to do. Use an independent insurance agent to get a quote.

@Colleen F.. I did use an independent agent. He got me a quote from Steadily. He said I have to get a policy from an agent in the state I live in.

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Jonathan Bock
Accountant · Bryn Mawr, PA · Member since 2023 · 409 posts · 321 votes
2y
Marc,
You may have already solved this but my recommendation would be to get renters insurance for yourself right now. Yes you should be paying renters insurance while living with your in laws the cost will be absurdly low and then you can get your umbrella policy from your carrier to cover the liability that concerns you.
I'm surprised your insurance agent didn't have you get a renters policy to begin with.
Let us know if that simple fix solves it?
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Colleen F.Pro Member
Investor · Narragansett, RI · Member since 2013 · 8k+ posts · 4k+ votes
2y
@Marc S. it sounds like you used an agent that doesn't write in your state of residence. You probably would need an independent agent in your state too, or add it to a $20/month rental insurance policy. The thing with umbrella policies is they require you to have a certain liability on your base policies for auto, etc.
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John Mocker
Insurance Agent · Norwalk, CT · Member since 2016 · 2k+ posts · 1k+ votes
2y
Mark
I had a client that was in your exact situation a couple of years ago. He was living with his parents until he could purchase his home. He had Investment properties and wanted an umbrella. In order to get the umbrella we needed to write a Renters policy for him. Even though he had coverage for his belongings under his parents policy, he needed Liability coverage in his name (other than the rentals).  We wrote a Renters policy and then added the Umbrella policy.
The renters policy will not cover the rental property in TX (some companies will extend the Liability coverage but not the Building). For that, you will need a Dwelling Fire policy (some companies call that a Landlord policy). See if you can get the Dwelling Fire and the Umbrella from the same company. Keeps the Liability coverage in one place.
If you have problems getting the Renters and Umbrella, PM me and I will let you know what insurance company I used.
0 Reply
Marc S.
OP
New to Real Estate · NY · Member since 2015 · 119 posts · 36 votes
2y
Quote from @John Mocker:

Mark
I had a client that was in your exact situation a couple of years ago. He was living with his parents until he could purchase his home. He had Investment properties and wanted an umbrella. In order to get the umbrella we needed to write a Renters policy for him. Even though he had coverage for his belongings under his parents policy, he needed Liability coverage in his name (other than the rentals).  We wrote a Renters policy and then added the Umbrella policy.
The renters policy will not cover the rental property in TX (some companies will extend the Liability coverage but not the Building). For that, you will need a Dwelling Fire policy (some companies call that a Landlord policy). See if you can get the Dwelling Fire and the Umbrella from the same company. Keeps the Liability coverage in one place.
If you have problems getting the Renters and Umbrella, PM me and I will let you know what insurance company I used.

thank you everyone for your input. It seems like I have a bunch of people with knowledge giving me various bits of advice.

@John Mocker. I will DM you if that's ok?

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Marc S.
OP
New to Real Estate · NY · Member since 2015 · 119 posts · 36 votes
2y
Unless someone can correct this, ultimately, I would need to get a renters policy while living with my in-laws. I was also told that in other states, there are certain renters' policies that do not allow for "renters" in their homeowners insurance policy.
So, what I need to do now is find out if my in-laws homeowners' policy (Here in NY) allows for renters, if it does, I have to get a basic renters policy for me and then I can get the umbrella. The major issue is if my in-law's policy does not allow for renters, I am really f-ucked. The other issue is my wife, and I are trying to not involve my in-laws (her parents) in our business.
If any is from NY and can confirm this, please let me know.
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Colleen F.Pro Member
Investor · Narragansett, RI · Member since 2013 · 8k+ posts · 4k+ votes
2y
@Marc S. What is your legal address? The thing to do is whatever is your legal address is that is your address for insurance. If it is your MIL's place are you renting from them? or just staying. My homeowners insurance says I can't have more than two renters and some policies you can get a rider on insurance for renters. Someone can help them look at their policy to see what the restrictions are. If it outright says they can have renters you don't have to call and ask. Otherwise you could have them call and say hey the kids moved in and they want a renters policy, is it a problem if they get a policy on their own.
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