Commercial Insurance Policy for multiple Rental Homes

4 Replies

I just found Bigger Pockets after all of this time and this will be my first post....

I have been involved in buying and selling investment properties for a while now and currently own multiple buy and hold SFR rentals and one condo.

My question is this:   I recently started looking around at insurance options for the portfolio and after speaking with a few agents I found one who said they specialized in people who own multiple rental homes.  She proposed that we have a commercial policy issued for all of the rentals and quoted me on that.  In the end we will save a ton of money this way and they just bill us monthly, I can even put it on my Amex because none of them have loans/impounds.

My now former agent tried to make a point though that I am at a huge risk because the policy covers multiple properties that are owned by different entities. There are 4 individual LLC's which own a couple properties each that are all owned by a trust. There are another two LLC's outside the trust which also own multiple properties. All of the LLC's and my wife and I will be on the policy as additional insureds.

Is this a normal way to structure this?  Is it safe?

@Kevin Kelly

I'm new to posting on here. Sorry I didn't notice this earlier. I'm a licensed p/c agent in MO, AR, and MT. In general, you want to have separate policies for each entity. When several entities are in the same policy, they share liability limits and it can be easy for them to be used up. Since the trust owns the LLCs I would think that you could write them all through the trust. However, you are spreading yourself kind of thin. I'm not even sure how you could get the LLCs outside the trust on the same policy. The last thing I would like to point out is why do you need to be a named insured? If your LLC is the named insured that includes its members. If I had a client bring this to me, I wouldn't feel comfortable structuring the insurance policies this way. I hope this helps.

It's common but you do want to make sure you have adequate liability limits. Use some of that savings on an umbrella. $2-5m depending on your comfort level.

Thought I'd bump this, currently going thru the same. Amazingly no one seems to really talk much about the insurnece issues with multiple property's.

I'm new to posting here as well.  There shouldn't be any problem with writing it on a Master policy- We do it all the time.  Each property should have a dedicated limit of coverage.

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