Unbrella insurance hard to find

10 Replies

I was looking for an umbrella policy and have just about given up. After 3 to 4 hours invested I am having no luck.

Always a problem.

Over 10 rentals

Will not write over the current landlord polices

Not available in my state ( Va.)

Will need to change all my current rental policies to a commercial

Any help appreciated

Hi Ray,

The problem you are experiencing is not uncommon as you are likely dealing with a "personal lines" company and looking for a "personal umbrella" to cover your income producing "business activities" (your rentals). 

The IRS considers anything which generates income for you a Business activity. It is irrelevant whether you own the property in your personal name, an LLC, Corp or Trust, etc...

The vast majority of insurance people out there do not understand this because the majority of them are not active investors themselves and because of this, provide incorrect information and either inferior products and in many cases, based on my experience, the absolutely incorrect product altogether. This puts their clients and themselves at risk.

Coverage for your rental properties needs to be written on a commercial form, underwritten as a tenant occupied dwelling and at least $1,000,000 in liability. You want to look for the flexibility to not be subject to Co-Insurance requirements or minimum earned premiums and varying choices in deductibles and coverage forms. You also want to be able to switch coverage on the fly between a property being vacant, occupied or under renovation as sometimes you might experience a longer vacancy than expected during a turn or have to do a more major renovation after many years.

Another thing you'll want to look for is a master policy with simple monthly reporting with no minimum earned premiums and no new down payments every time you add a property.

Also, all "personal" policies and "personal umbrella" policies have what is called a "Total Pollution Exclusion." Many commercial policy forms allow you to "buy back" coverage for at least one type of "pollutant" that is pertinent to landlords. This coverage will offer defense and claims settlement for alleged or actual injury caused by CO2 emissions from a heating or air conditioning source.

You can add a "personal umbrella" to cover your personal liability exposures of your home and auto, if your net worth justifies it, but you should keep any income producing assets separate from your personal liabilities.

There are very few companies who understand this and do it right but once you get set up right and realize how much easier it is to manage and scale your business up, you'll be glad you did.

Ivan

Agreed with the above.  One item to check is coverage form.  Make sure you are covered on special form instead of basic form for property. 

As for obtaining a commercial umbrella, you need to contact an independent agent.  The Allstate, State Farm, Farmers agents just are not going to do it on a commercial umbrella, heck they won't even write a home if it is in a businesses name. 

Originally posted by @Derek Lacy :

Agreed with the above.  One item to check is coverage form.  Make sure you are covered on special form instead of basic form for property. 

As for obtaining a commercial umbrella, you need to contact an independent agent.  The Allstate, State Farm, Farmers agents just are not going to do it on a commercial umbrella, heck they won't even write a home if it is in a businesses name. 

 Probably depends on location, but I have had no problem getting commercial umbrella coverage from my local State Farm agency.

My wife, in her past life, was a State Farm Senior underwriter.  She would be interested to see that policy, but leaves two options.  One, are you not as a property investor on the umbrella policy?  They will write umbrellas on many classes of business 1 family dwelling just is not one of them (or was 5 years ago). 

Or maybe it is a personal umbrella policy that they agent is representing as commercial?  What name does it have on the top of it?  If it is your personal name it may be a misrepresented commercial umbrella policy. 

Her or I would admit that there are millions of exceptions to any rule in insurance, heck they insured Jennifer Lopez's backside where does that fit into the scheme of things, but it would be unusual for Big Red (State Farm) to do that.

Ran into the same problem. They say 5 is the limit for residential and LLC's need a commercial policy Account Closed

One agent suggested putting a million dollar liability onto the existing policy for my LLC.

With 10 you are a commercial guy for umbrella and consequently, like you say you need it all under one company. To try to have separate companies is cost prohibitive. Best to find a commercial broker specializing in commercial policies IMO.

Originally posted by @Ivan Oberon:

Hi Ray,

The problem you are experiencing is not uncommon as you are likely dealing with a "personal lines" company and looking for a "personal umbrella" to cover your income producing "business activities" (your rentals). 

The IRS considers anything which generates income for you a Business activity. It is irrelevant whether you own the property in your personal name, an LLC, Corp or Trust, etc...

The vast majority of insurance people out there do not understand this because the majority of them are not active investors themselves and because of this, provide incorrect information and either inferior products and in many cases, based on my experience, the absolutely incorrect product altogether. This puts their clients and themselves at risk.

Coverage for your rental properties needs to be written on a commercial form, underwritten as a tenant occupied dwelling and at least $1,000,000 in liability. You want to look for the flexibility to not be subject to Co-Insurance requirements or minimum earned premiums and varying choices in deductibles and coverage forms. You also want to be able to switch coverage on the fly between a property being vacant, occupied or under renovation as sometimes you might experience a longer vacancy than expected during a turn or have to do a more major renovation after many years.

Another thing you'll want to look for is a master policy with simple monthly reporting with no minimum earned premiums and no new down payments every time you add a property.

Also, all "personal" policies and "personal umbrella" policies have what is called a "Total Pollution Exclusion." Many commercial policy forms allow you to "buy back" coverage for at least one type of "pollutant" that is pertinent to landlords. This coverage will offer defense and claims settlement for alleged or actual injury caused by CO2 emissions from a heating or air conditioning source.

You can add a "personal umbrella" to cover your personal liability exposures of your home and auto, if your net worth justifies it, but you should keep any income producing assets separate from your personal liabilities.

There are very few companies who understand this and do it right but once you get set up right and realize how much easier it is to manage and scale your business up, you'll be glad you did.

Ivan

Yes, I had already realized that I needed a Commercial umbrella. But that does not seem any easier to find.

Will try Arcana as suggested below. But their website does not mention any umbrella insurance.

Thanks for any and all suggestions 

Did try Arcana but they do not offer a stand alone policy. Would have to switch all of my property insurance to them.

Account Closed 

What is the liability limit on your current policies?  A stand alone commercial umbrella/excess policy that goes over other insurance carriers will require your current policies to have $1,000,000liability  limit. 

 Does your current insurance policy have the option of increasing the "Occurrence" limit to $2,000,000?  An alternative to consider to get you the same result as adding a $1,000,000 umbrella/excess policy.  This can also less expensive than purchasing a separate policy.

Lastly, there are policies out there but the minimum premium may be higher than what you feel is reasonable. 

[email protected] | 414‑270‑6834

Do currently have 1 mil on each property. But was looking for an umbrella to add another 1 mil to properties but also to cover me and the wife for anything that might happen.