Brooklyn, NY · Member since 2019 · 14 posts · 6 votes
Hi everyone,
I have an LLC that holds a couple of properties. Am getting a lower premium (approx $250-$350) if I have one of the members of the LLC as named insured. Upon some research, I found that the 2 disadvantages of having it set up this way are:
- Any claims can be a part of my personal record (and could affect insurance quotes in the future on the personal side).
- In case of claims, the insurance check would be made out in the member's name as supposed to LLC's name.
Are there any important considerations/areas/risks that I am missing? Especially from a personal/LLC liability standpoint?
Insurance Agent · Maumelle, AR · Member since 2015 · 131 posts · 41 votes
5y
Jay,
I know when I write policies in an LLC, different companies like it to be written differently. Some List the LLC as the named insured and then the individual partners under that as named insureds. Others want the LLC to be an "additional insured" almost like a Mortgagee but want the policy in the name of the individual(s) and that's how they rate it. Some companies won't write the policy in the name of the LLC period. Never have I seen it cost you more or less to do either.
Just make sure on the commercial policy your addressing coverage like:
*Replacement Cost(the property and any personal property). Be in the know if you're dealing with a "coinsurance" clause.
*Loss of use or Business income. This is a biggie. You want to be paid if you have a loss and can't rent it while it's being repaired/rebuilt etc.
*on the liability side, find out whether the limit is per location, per term, per door whatever. Just know what your policy covers.
Brooklyn, NY · Member since 2019 · 14 posts · 6 votes
5y
Residential (1-4 units). Currently at about 12 units and plan on getting to at least 20 by the end of the year.
Also researching it further - sounds like Master commercial policy would be the best way to go once over 18-20 units which will resolve this whole issue.
Insurance Agent · Maumelle, AR · Member since 2015 · 131 posts · 41 votes
5y
Jay,
a "MASTER POLICY" will work for you, but remember you lose some coverage that you have with a "good" dwelling fire" policy. Also, you're sharing a liability limit throughout all the units. Hopefully that's never an issue, but you never know. Let me know if I can help.
Brooklyn, NY · Member since 2019 · 14 posts · 6 votes
5y
Thanks, Kevin. Could you give me a couple of examples of what coverage could I lose?
Also, circling back to my initial question - Are there any other disadvantages/risks of having a policy with a LLC Member as named insured vs the actual business/LLC?
Insurance Agent · Maumelle, AR · Member since 2015 · 131 posts · 41 votes
5y
Jay,
I know when I write policies in an LLC, different companies like it to be written differently. Some List the LLC as the named insured and then the individual partners under that as named insureds. Others want the LLC to be an "additional insured" almost like a Mortgagee but want the policy in the name of the individual(s) and that's how they rate it. Some companies won't write the policy in the name of the LLC period. Never have I seen it cost you more or less to do either.
Just make sure on the commercial policy your addressing coverage like:
*Replacement Cost(the property and any personal property). Be in the know if you're dealing with a "coinsurance" clause.
*Loss of use or Business income. This is a biggie. You want to be paid if you have a loss and can't rent it while it's being repaired/rebuilt etc.
*on the liability side, find out whether the limit is per location, per term, per door whatever. Just know what your policy covers.
@Jay Shah I would suggest you consider this: LLC should be a separate legal entity from its owners. If you put your name on the insurance of LLC owned properties, does it mean that you are personally responsible for any claims against LLC? If yes, doesn't it defy the point of having an LLC ?
I don’t have answers to these questions, but if I were you would investigate this side of your situation before being tempted by lower premium.
Brooklyn, NY · Member since 2019 · 14 posts · 6 votes
5y
@Ben Guttman I am looking for a couple of quotes. What's the best way to reach you?
@Nino G. Agree. Looking into both those things now. But looks like it would be wise to not have our names on the policy as it would potentially defeat the purpose of having an LLC from an anonymity standpoint. Thanks for taking the time to respond.