umbrella insurance - how much?

Question

Looking to get a 6 family investment property under an LLC but also considering getting umbrella insurance.  Any opintions? Should umbrella insurance be under the name of LLC or the person? Also what is a good amount? Looks like its 1 million and up.

Sharad M. · Answer

I have $2mil coverage for each of my LLCs and I am increasing it to $3 mil mainly because I purchase my properties all cash, so having additional $1 mil gives me peace of mind for not a lot of incremental cost.

Jerry W. · Answer

I currently have a subchapter S corporation and I am in a second with another person.  I am also in 2 LLCs with others.  In one I do no work myself, it has a $500,000 policy.  In the one I do work myself on nearly every day, I have an added 2 million dollar umbrella.  Liability can vary depending on what type of activities you do.  Passive activity and active participation make a huge difference.

Adrian Tilley · Answer

@Peter Fokas Generally in $1m increments.  Personally, I would base the amount of insurance on how much you have in equity.  If you have little equity and no job, $1m is more than enough.  If you have $1m in equity and a $200k/year job, I might get $3-4m.  Basically, you want to incentivize anyone who would sue you to accept the limits on the insurance and not continue to come after you personally.

I put my umbrella on me personally.