Commercial Insurance Policy and Liability Amounts

6 Replies

I'm currently in the middle of my first deal, which is exciting. Learning something new every day. Part way into the process we decided to not purchase the house using conventional financing but instead us a commercial loan in order to the deed in the name of the LLC. I checked the numbers and they were tighter than before but still manageable. They met my criteria.

However, quotes that I had received for insurance were based on the property being in my name with a $500k liability coverage.  I've found a property management company that has a contract stating $1MM is a minimum, which is naturally killing my numbers.  

Is $1MM normal for a single SFH?

Any advice or guidance would be greatly appreciated.  Learning something new everyday.  

Thank you!

how much is the property worth for them to want you to take out a 1 million dollar property? and when you get insurance it is only for the building not the land, it all depends on the property I live in the north east and I only pay 600 a month for a proper building insured for about 100,000

The property is worth ~72k.  I'm assuming the $1MM is just their standard starting point.  They use the Missouri forms.  

Hey Chad. I will start to help people with insurance some time in end of this month. Chad if I could helpful to you or other people, partners who seek advice/suggestion or just a quote in insurance of property and casualty, life and health as well let me know . I am not fully licensed yet and therefore cannot give any further assistance. I will serve in KS/MO states.

" If found yourself in a hole the best what you can do is stop digging" Warren Buffet .

@Chad Hotovec going from $500k to $1MM in liability coverage should a nominal increase, say $20-$30 per year.  Sounds like you need to check with some other brokers/insurance carriers.

I see $1MM liability for rentals as a standard limit for most landlords.  I personally do not write policies with lower than $1M liability as the savings does not out weigh the risk.

@Jason Bott   Would you be able to explain the differences between having a commercial liability policy above the standard homeowners policy vs having personal umbrella insurance?  My umbrella policy will only allow me to put 4 additional rental properties under my umbrella since they are in my name and I have an additional 4 properties which I have a separate commercial liability policy.  Seems to be the same concept, though a little more expensive, but I haven't seen in covered by anyone previously in a post. 

@David D'Ambrosio Personal Umbrellas that go over rentals, are meant to be a convenience to thee owner who only has a few locations that they self manage.  Once you get beyond a handful of rentals (this # can be different for each insurance carrier), they feel you are running a business, and your portfolio is becoming more commercial than personal.

Does that fully answer your question?

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