Hello BP community,
Is Geico umbrella insurance of any use to investors?
I have some rental properties and following the advice to purchase umbrella liability insurance. Our home insurances were done through Geico (as I am sure many of you do) however when I look at their personal umbrella liability insurance policy I can see that (among the 41 exclusion items :) ), some exclusions are quite concerning and actually might not cover us under some of the more common causes of liability lawsuits/loses that we could imagine happening while we rent our rental properties.
I wonder if these exclusions typical for umbrella insurance policies OR its just Geico that is not fitting for investors ? Maybe some of you have other policies which are more comprehensive?
Here are the exclusion I am referring to:
1. No coverage for damages from "Business pursuits or business property of an insured"
Is 'renting' meeting the definition of business pursuits?)
2. No coverage for "Liability assumed by contract or agreement"
This is very broad.. we have a contract/agreement with our property manager and with our tenant..
3. The only damages they cover are damages resulting from personal injury or property damage. So if a tenant is going after me with a lawsuit for all kind of complains that are not injury or damages, this policy will not apply.
4. They will cover only up to 4 rentals
Thanks for sharing from your experience
Not all are typical and yes you are reading those correct. You need an independent agent not an 800 number. Personally I take 20-80 hours CE a year to keep up on the changing insurance market and deal with over 400 insurers so I can find the right solution for my clients. My advice, Never trust a 800 number or website with your financial well-being.
Sometimes 15 minutes can save 15%. But other times it can cost a lot.
Your best bet would be to call Geico and ask to speak to an Underwriter. They can clarify your questions in regards to what is and isn't covered. However, here are my interpretations of the exclusions that concern you:
1.) Business pursuits or business property would be referring to a business you run from the property for financial gain but would not include the rental income you receive from the property. They wouldn't allow you to add rental properties to the umbrella coverage if they were going to exclude it in the language of the contract. They'd be setting themselves up for their own lawsuit.
2.) This is broad but I believe what they are trying to exclude is you assuming liability for someone else's actions via contract. I'd assume that's not the case with either of your contracts. Both your property manager and your tenant should have their own liability coverage.
3.) This is straight forward and common. What else would the tenant sue you for? If you aren't keeping up your end of the contract - i.e. fixing the plumbing when it needs done - the insurance company isn't going to cover you for being an absent landlord.
4.) It is common for most standard companies to have a limitation on how many properties or units they will cover under an umbrella policy. Most of my standard carriers are in the 6-8 unit range. But I also have a carrier who will write up to 25 units.
I hope this helps.
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