Massachusetts Limited Liability Insurance Estimates

6 Replies

Easiest way for someone to answer would be if they have formed an LLC already that is similar to what mine will be. A 1 member,

Tried to get a quote online for Liability Insurance in advance of starting an LLC. Well so much for that. Does not seem to work, unless you're already incorporated. So much for the 5 minute online quote that they promise on the wen everywhere.

The LLC will start out as a one member, manager managed company. I need the Insurance to conform with the Mass Law 211CMR24 regarding minimum liability coverage for llc's in Massachusetts.

I have already read the State's mumbo jumbo down below and I am not clear as to how much the state of Mass wants.

Any members here in Mass that can give me an idea of how much it will cost for a year's worth of minimum liability insurance?

Not related to this post but below shows the Mass requirement for the minimum. How much are they asking me to have, because I cannot understand their way of putting it.

24.04 (a) Says I need errors and omissions. This is an extra cost deal. I am clear on this.

24.04 (b) My interpretation of (b) below How much does this mean. It is a 1 member LLC, so multiplied by the members it should be $100,000.00 for each claim of at least $100,000.00 At least, I think. Since there would not be any other members in the beginning I would not need an aggregated amount of $250,000.00 for 2 or more members. Am I correct?

(2) Below, I think they are saying that I must keep a policy that will cover a claim of $500K for each claim. The Aggregate part below is confusing to me. What is it Top Limits on claims each year $1,000,000.00 ??????? for a 1 member LLC? Does aggregated amount have to do with more than one member?

http://www.lawlib.state.ma.us/source/mass/cmr/cmrt...

Below is the Mass way of describing the law

24.04: Required Insurance and Capital Program
(1) An LLP or LLC must maintain in good standing professional liability insurance which meets the following minimum standards:

(a)The insurance shall cover negligence, wrongful acts, errors and omissions and insure the LLP, LLC and their respective partners and members (M.G.L. c. 108A,

Ronald, you haven't said what the LLC will do. If you are flipping houses, you'll need liability on each house. If you are a broker, I'm pretty sure there is a different policy. Talk to nreinsurance.com, they specialize in real estate investor insurance, @Tim Norris can help you.  Send him a PM if you don't get your answers on their site.

@Ronald H.  

I'm pretty sure that section of the code are regulations for Division of Insurance.   So what they're spelling out is required liability insurance for LLCs LICENSED by the Division of Insurance and not requirements for liability insurance for all LLCs.

Standard not a lawyer disclaimer.

Thank you Ann and Phil.

I guess that I will start with Ann. Yeah, Ann the primary and really sole purpose of the business is to make a profit by "Buying, selling, leasing, renting and joint venturing with partners to make a profit." That is the simplest way I can put it.

To let you know the aggravation I had today I will say that when tried to get an estimate for an LLC, I had to choose a Real Estate Broker profession, and their was NO option for anything else. Later on into the online quote process, they would ask me a question, such as "What is your Real Estate License Number" or something else that I could not provide. Aggravating!

Since my main focus is to wholesale, distressed properties, which could be vacant properties, out-of-state owner's, preforeclosures, short sales and probate leads, setting up an LLC for each one would not make sense, unless I were in the position where I was hiring the Contractor and he and his employees would be on the job site for a couple months, then the liability issues may warrant the extra expense, even though I would want the Contractor to have his own liability and workman's comp insurance. Am I correct?

In addition, if I later decided to rent apartments as a Landlord, I might also want to seek the protection of an LLC, along with the additional Insurance Expense. Please feel free to correct me if I am wrong, because networking is what it is all about.

NOTE: Yes, I do know that some Individual's purchase every property under a different LLC. I guess my question now becomes, "what is the trigger that pushes one to do this?" I guess it warrants a good hard look into the consequences.

Buying low, and selling low to make quick cash is the main objective and I want to do it right.

Again I ask, How much, are other 1 member LLC companies paying these days in Massachusetts for a 1 year, limited coverage, liability insurance plan. Most here are in similar businesses, so it shouldn't be too hard to discover.

I'm not talking about separate LLC's for each house, I'm talking about separate policies for each house. And I'm not even sure about that. You need to speak to a human and not try to get your answers from a web form. Again, call Tim Norris. His website is in my previous post. Then instead of getting frustrated with what the webform is pre-designed to require, you can outline what you are doing and get real explanations. Or if you want to talk to someone local, call Jen Aalerud, if you don't know her, PM me and I"ll send you her email.

I have a foreign entity LLC in Mass as I started in California, but I did not need to have insurance policy in place to get one. I do insure each rehab via a builders risk policy which does include limited liability. My advice is to apply for LLC. You will either get it or be denied for not having X Y or Z. Then you will know exactly what you need.

Bob Couture, Real Estate Agent in MA (#9534609)
413-314-3583
Originally posted by @Ann Bellamy :

Ronald, you haven't said what the LLC will do. If you are flipping houses, you'll need liability on each house. If you are a broker, I'm pretty sure there is a different policy. Talk to nreinsurance.com, they specialize in real estate investor insurance, @Tim Norris can help you.  Send him a PM if you don't get your answers on their site.

 Thanks for the help @Ann Bellamy, I also contacted @Tim Norris to see what he could do for me - always important to stay on top of insurance quotes.


Best regards,

Flavio

Join the Largest Real Estate Investing Community

Basic membership is free, forever.