Unbrella Policy needed

5 Replies

Neither of the two insurance companies I use for my rental properties offer a Unbrella policy. State Farm and Erie.

Any suggestion s if you have over the 4 property limit.

Thanks

I have 5, the key with the umbrella policy is it is tied to your auto insurance. So you need to call you autopolicy. We have AAA and have 5 properties with no problem.

Ray,

I had the same problem with 4 property limit on my umbrella policy.   I got dropped from my umbrella policy with Geico once they find out that I had more than 4 properties.  I shopped around and everyone seemed to have the same 4 property limit.

The way I got around that is get a 1 million dollar "commercial liability" insurance on my properties.   I used have 300,000 liability but I switched to the Affinity group insurance which is a national insurance company that covers properties in multiple states.   

Once I was able to cover my rental properties at 1 million dollar liability, I was able to reinstate my umbrella policy with Geico.

@Joe Kim  

how much did that commercial policy cost you? I have not checked a blanket liability policy, but anytime I inquired about a single property commercial insurance, the rate was 3-4x the regular one.

@Rumen Mladenov  

$1 million liability is very cheap.  What makes insurance expensive or cheap depends more on other coverage - (actual cash value vs. replacement cost).   Jumping from $300,000 to $1,000,000 liability coverage is very cheap.  ( no more than $10-20 extra a month)

I did not do a blanket liability policy but $1M per property using Affinity group.

One big problem I am seeing here, which I see as very commonplace by the way because conventional insurance agents don't know better, is a lot of people co-mingling personal exposures with business or commercial exposures.

Here is a post I did on another social media platform that will hopefully help.  I am only on installment 4 here on BP.

Another thing to keep in mind is that with some programs, if you want more than $1MM/$2MM in liability, it is easy to bump your underline liability limit to $2MM/$4MM and not even obtain umbrella coverage.  This can be beneficial for a couple of reasons.

Installment #9 Insurance Issues For The Real Estate Investor

Umbrella Policies- Avoid the pitfall of assuming they are a panacea.

I've seen topics posted with a title of "Umbrella Policy or LLC" on various forums. It should never be a question of one OR the other. Remember, insurance is like the Archers & Knights that defend your castle. You still need your Castle Walls and Moat for a well rounded protection strategy for what is inside those walls.

I would also like to point out there are major differences between what most of you know as a "Personal" Umbrella Policy and a "Commercial" Umbrella Policy. This is a critical piece to understand when running your "business" of flipping houses or growing your rental property portfolio.

One of the most glaring dangers of your Personal Umbrella policy is the "business pursuits" exclusion! And let's face it, if your real estate investments are not a "business pursuit" in your mind, then you probably ought to consider divesting!

What is appropriate is a properly constructed package built on a solid commercial policy form with the ability to offer appropriate coverage for assets under any stage of occupancy or renovation, a simple monthly reporting format with no minimum earned premiums, the ability to waive co-insurance requirements, with no location limits, with the ability to insure multiple controlling entities, offer coverage in all 50 states, special form coverage with theft and vandalism and the ability to actually reduce premiums incrementally by aggregating locations, just to name a few little things.

Hope this helps.

Join the Largest Real Estate Investing Community

Basic membership is free, forever.

By signing up, you indicate that you agree to the BiggerPockets Terms & Conditions.