Umbrella Policy - First Rental

10 Replies

I purchased my first rental and am currently keeping it under my name (not an LLC). I am looking to add properties at a pace of 1 per year. Would an umbrella policy be the best option to cover me? What amount should I get the policy for?

Yes! We have all 5 properties in our name with a nice large umbrella (i believe 2 million). I would get the highest umbreall you can! They are cheap and worth it. 

Thanks for advice, I will get a quote from my insurance broker.  It was actually your post that got me thinking originally about it!

You typically have to assess your assets and determine what is the value of the total assets you own. That is the most someone could theoretically go after you for if they took you to court. If you have 1 million or less in assets, a 1 million dollar policy might be sufficient. Umbrella policy is a great idea, but your insurance guy can tell you what you need to make sure you're not over-insured. you can always adjust the policy later when your assets grow beyond that policy amount...

I also have all my rentals in my, and my wife's name.  We have a simple umbrella policy from Geico for $1 million.  It covers our personal residence, rental properties and all our vehicles.  We did however have to up the liability insurance on each of those things to $300,000...then the umbrella covers from the $300k to $1 million.    

Look at your assets outside of the rental property. That's what you're really protecting with an umbrella policy.

I have an umbrella policy but was told that it is a personal umbrella so it doesn't cover anything that has to do with my rentasl.  I just learned after 6 years of have rentals that I need to have a commercial umbrella in order for that to kick in if my liability insurance doesn't cover an incident.

@Karen S.  Ask another agent. You might be wrong. Every agent is different, some agents specialize in some things, and other explain them differently.

I'll check again.  I'm involved in a legal issue with an ex-tenant right now so I called my insurance agent to inquire if my umbrella would cover if my insurance is not enough and she said that a personal umbrella won't cover anything that is covered under a commercial insurance policy.  All this insurance stuff is so confusing to me.  

Originally posted by @Karen S. :

I'll check again.  I'm involved in a legal issue with an ex-tenant right now so I called my insurance agent to inquire if my umbrella would cover if my insurance is not enough and she said that a personal umbrella won't cover anything that is covered under a commercial insurance policy.  All this insurance stuff is so confusing to me.  

You need to change insurance agent. But, treat it this way, you have your own, and anything you don't own, it wont be covered. And when I say you don't own = owned by your LLC, remember LLC is an entity and not personal, so it has a name and EIN just like you have a name and an SSN. An LLC or Corp is a whole new person in the eyes of the law, but the distinction is that it is not present PHYSICALLY. I am not sure about rentals because I don't have one, but I structured myself is that I don't own anything but I control most of it.

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