Is $500K too low of a liabilliy limit?

Question

Hi all, we have 2x  2 family properties in Brooklyn. Both worth over $1Million

We've always been insured for $1M in liability.

Our broker presented an option for insurance for one property that would be $500K.

Do you think we'd be at risk with this level of coverage? When someone goes after a landlord, is there a certain range that settlements typically fall within?

Bill B. · Answer

It’s probably a better deal to buy an umbrella policy and lower the building liability to 300 or $500k (whichever is required by the umbrella company).

You are more likely to hurt someone personally than your building is.

Take your networth and tack on a couple hundred thousand and buy that big an umbrella. It will cover you in your cars, your personal home, and your rentals.

Jacob P. · Answer

Love getting the push towards an umbrella policy... It's been on my radar but never pursued. I think maybe our family has reached the tipping point where it's wortwhile.

J

Owen Rosen · Answer

Think about something very bad happening at your property (think fatality or permanent disabilities) and then ask yourself what an attorney might sue you for in that type of scenario.

The answer is every penny they can possibly recover from you including your rental properties which are not protected the same way a primary residence is.

So, have enough insurance to keep the target on your insurance limits rather than your families assets.

It sounds like an umbrella would be a wise investment for you.

Kevin Koone · Answer

Jacob, I'm in the business so take my answer with that in mind.  Buy as much liability as makes sense.  Usually the difference b/t 500k and 1 mill is pennies really.  I'd ask for the higher limits and honestly I'd ask for the highest he can provide on the policy.  Especially if you don't have an umbrella in place.

Is $500K too low of a liabilliy limit?

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