Insure rentals using same company as primary residence?

Question

I have an existing policy/umbrella on my primary residence with State Farm.  I'm looking to add 3 new out-of-state rentals.  Should I got with State Farm?  Or, can I go with any insurance carrier with the best rate/coverage.  I heard that when dealing with two different insurance companies, one company will often tell you to work it out with the other.  i.e. my personal residence umbrella won't cover the rentals because they're with another company.

Steven G. · Answer

No - I do not have an umbrella policy through them and they do not offer them as part of their main insurance program if I recall correctly (you may need to call them and ask, for clarification).I can tell you that NREIG offers up to $2mm in liability per property/policy, and that's a pretty sizeable amount of coverage. What I would recommend is (a) get $2mm in coverage per policy, and (b) put all your properties in an LLC and not your name. When the value of the assets [value of the houses] gets close to $2mm, then create a new LLC and start putting houses in it. Just rinse & repeat after that.

One note - the above formula should work - but you could even protect your assets even better by lowering the ratio of house values per LLC ($500k in houses, or $1mm in houses per LLC) OR getting a series LLC if your state offers that.

Steven G. · Answer

If you plan on only having a few rentals, I'd keep State Farm (or Allstate, etc). If you plan on growing "big" in time, and want flexibility with your policies (e.g. you can convert a rental to a note and keep the same policy, have vacant/rehab coverage, etc) - I'd recommend National Real Estate Insurance Group. Their website is http://www.nreinsurance.com/