Need for comprehensive personal liability

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Need for comprehensive personal liability

Tim Welker
Member since 2021 · 20 posts · 2 votes

My wife and I have an LLC with 3 STR Vacation properties. 2 are in Panama City Beach. We've had them for 4 years now. I've always carried a personal liability policy and just got my renewal notice. We do not self-manage, we have quality property managers. Do we need this additional coverage?

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John UnderwoodPro Member
Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
1w

Not sure what you're asking.

You need the correct STR policy for proper coverage.

Umbrella policy for another layer isn't necessary but some people like the extra coverage.

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  • Andrew SteffensBusiness Member
    Tampa, FL · Member since 2022 · 3k+ posts · 3k+ votes
    1w

    Not sure if anyone here can answer that - it is a personal question.  Do you need it? No.  You need homeowners insurance if you have a mortgage because it is required and therefore necessary.  Your personal liability coverage is optional.  If you should have it will likely depend on what assets you have.

    Also, it may not be a great idea to have all 3 properties in the same LLC. If one property has a mishap, lets say a death, and the LLC is found liable, the judgment would go against all other properties in the LLC. If they are separated they are better protected.

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    • Tim Welker
      OP
      Member since 2021 · 20 posts · 2 votes
      6d

      Thanks for the response. I've decided to renew. For a few hundred $'s, it's worth peace of mind. If I were doing it all over again, yes, I'd do separate LLC's but don't think it's worth it to go back and redo.

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  • John UnderwoodPro Member
    Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
    1w

    Not sure what you're asking.

    You need the correct STR policy for proper coverage.

    Umbrella policy for another layer isn't necessary but some people like the extra coverage.

    2Reply
  • Jules Aton
    MD/DC · Member since 2024 · 1k+ posts · 1k+ votes
    1w

    Regardless of if renting out properties or not in my opinion an umbrella policy is a relatively cheap additional safety net if there is a major adverse event especially if you are perceived as someone wealthy.

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  • Michael Eskenasy
    Investor · Pacific Northwest · Member since 2026 · 511 posts · 290 votes
    1w
    I wouldn’t make this decision based on the LLC or the fact that you use property managers. I’d make it from the coverage stack. For each property, I’d map: STR/landlord policy → premises liability limits → property manager coverage/indemnity → any platform coverage → umbrella/excess coverage → what, if anything, can still reach you personally. The key question for the renewal is whether your personal umbrella actually covers these rental/business exposures. Some policies exclude or severely limit LLC-owned properties, short-term rentals, or business activity. If that’s the case, the right answer may be a commercial umbrella/excess policy rather than simply renewing the personal one. And good managers reduce operating risk; they don’t eliminate owner liability. You still own the asset. I’d ask your broker to give you a one-page gap analysis showing who pays first, policy limits, exclusions, and what happens in a $1M–$3M claim across all three properties. Then the answer becomes pretty obvious.
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  • Michael BaumPro Member
    Olympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
    1w

    Too many people think and rely on LLC's as an armored shield that will protect them from anything.

    LLC's are great for contract stuff but not negligence. If anything is amiss or can be proved that a thing caused the issue, then you will be on the hook.

    @Tim Welker I would separate the properties into distinct LLC's. A series LLC with each property in a child LLC will fit that bill.

    At least the other properties shouldn't be able to be touched if something happens.

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  • Stuart UdisPro Member
    Attorney · Philadelphia · Member since 2018 · 2k+ posts · 3k+ votes
    1w

    @Tim Welker The starting point should always be understanding the liability exposure you will realistically face as a real estate owner and ensuring that you operate your business properly, carry appropriate insurance and use practical asset-protection strategies. The most likely liability exposures also differ depending on the type of real estate you own/operate and the specific strategies you utilize. Most real estate investors fail in this department because they cannot clearly articulate what they are protecting themselves against. As a result, they either spend unnecessarily on elaborate structures or impractical insruance coverage or fail to follow the basic operational practices needed to protect themselves.

    In your case, you mentioned having a Property Manager. This adds an additional layer because merely having a property manager does not protect you, the property owner. What authority to act on your behalf does the property management agree allow? Do they carry appropriate GL and E&O coverage? If they have the ability to select/and or authorize repairs, are they executing contracts where additional insured endorsements are turned over protecting you? Is there appropriate indemnification language in the various agreements that impact you? How is the property manager proactively seeking out and eliminating premises liability exposure? How is this being documented?

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    • Drew SygitBusiness Member
      Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
      1w

      @Stuart Udis great answer EXCEPT for the part about a PMC having premises GL coverage.

      Have NEVER found a policy in 26 years that will cover a PMC for liability on a property they don't have ownership interest in.

      So, PMC's either need to be added to owner's policy or have a master policy they add an owner to.

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  • Stuart UdisPro Member
    Attorney · Philadelphia · Member since 2018 · 2k+ posts · 3k+ votes
    1w

    @Drew Sygit It is not specifically premises liability coverage that a property manager should carry. It is commercial general liability coverage. Ownership of the property is not required to obtain that coverage and depending on the facts pattern and contract between PM and the property owner, the PM’s CGL policy could absolutely be called upon to cover bodily injury alleged in a premises liability claim.

    The most equitable management agreement should contain reciprocal indemnification provisions. Whether the property owner’s policy, the PM’s CGL policy, or both respond to a particular claim will depend on the facts, the parties’ respective responsibilities, contractual provisions and insurance endorsements.

    For example, assume the lights in a common-area stairwell go out, the PM receives notice but fails to have them replaced within a reasonable period, and someone falls and is injured. If the management agreement makes the PM responsible for routine maintenance and contains equitable reciprocal indemnification provisions, the claim should fall primarily within the PM’s contractual responsibility, and its CGL coverage could be called upon to respond. Will the injured party most likely file a claim against both the property owner and the PM? Probably. Whether the policy provides primary and noncontributory coverage will depend on its specific contractual terms and endorsements.

    As another example, assume a PM mops a lobby floor but fails to place warning signs, and a tenant slips and is injured. That claim arises directly from the PM’s operations, even though the PM does not own the building. The PM’s CGL policy could therefore be expected to respond to the claim. The responsible party can also be a vendor that's retained by the PM which is why its important the PM executes contracts with appropriate indemnification with vendors where both the PM and the property owner are treated as additional insured with appropriate endorsements. Similarly, no ownership but the vendor's CGL policy could be called upon. This is actually an area where many PM's fail their duty to property owners and can really help themselves and the property owners by incorporating better contract management, being more prudent with ensuring there are favorably risk shifting contractual provisions and collecting additional insured endorsements protecting both the PM and the property owner.

    As a property owner, if I am turning over the keys to a property manager, I would not want to assume responsibility for a premises liability incident that could have been avoided but for the PM’s failure to act. On the other hand, if the incident arises from a property condition or event that a reasonably prudent PM could not have prevented, responsibility should fall on the property owner. This principal is not unique to the property owner and property manager relationship. Generally speaking, in any business relationship, responsibility should be allocated to the party whose acts or omissions caused or could have prevented the loss.

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    • Drew SygitBusiness Member
      Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
      1w

      Appreciate what you're posting, but we have NOT been able to find that coverage despite attending numerous industry events with vendors and asking EVERYONE where to get it.

      We do have E&O coverage which can cover SOME liability issues, but no slip & fall.
      Slip & fall is ALWAYS covered by the owner's policy or our master policy that we added the owner to.

      Perhaps the master policy is what you are referring to?

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  • Stuart UdisPro Member
    Attorney · Philadelphia · Member since 2018 · 2k+ posts · 3k+ votes
    6d

    There's absolutely commercial general liability coverage available for property managers, just as there is for realtors, contractors etc. etc. A real estate agent or property manager can be sued for premises liability when the agent exercises control over the property or personally contributes to the dangerous condition. Again, fact pattern specific but certainly plausible. Procedurally what you will most likely see is the lawsuit naming both the PM and property owner in the claim because that's how Plaintiff attorneys take inventory of responsible parties and various insurance policies that could be relevant to recovery. However, as the property owner, in the instances where the injury was caused by a dangerous condition created by the PM or alternatively could have been avoided but for the PM’s failure to act, I want my PM agreement to have indemnification language as well as an additional insured endorsement that makes the PM's CGL policy primary over mine.

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  • Stuart UdisPro Member
    Attorney · Philadelphia · Member since 2018 · 2k+ posts · 3k+ votes
    5d

    @Drew Sygit A simple online search will provide you with a number of direct to carrier Commercial General Liability options. I am not going to endorse or recommend any specific carrier. Even though you can obtain this coverage on your own, I recommend working with an experienced broker licensed to serve your market. If you are currently using a broker and they haven't been able to secure commercial general liability coverage for you in 26 years, there's something fundamentally wrong with their qualifications and you should seek out better representation.

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  • Stuart UdisPro Member
    Attorney · Philadelphia · Member since 2018 · 2k+ posts · 3k+ votes
    4d

    What was the explanation or reason why you were denied general liability coverage?

    As I mentioned I do not endorse any singular carrier, but this coverage exists. A simple search on google provided this as the first result. Property Management Insurance Professional & General Liability | Hiscox

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    • Owen RosenBusiness Member
      Professional · Clinton Township, MI · Member since 2015 · 676 posts · 259 votes
      3d

      Yeah, I think the issue here is not whether or not a property manager can get general liability insurance for their business (they certainly can) but what it would actually cover and what other policies need to be in place. So, I agree with @Stuart Udis that it's very much fact pattern based.

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  • James Folk
    Developer · Mount Sinai, NY · Member since 2026 · 8 posts · 1 vote
    3d

    If you use exclusively Airbnb, they cover a lot. I had a guest drive into our deck; Airbnb covered the $7K bill. Nonetheless, I would say it would be a good idea to have an umbrella policy.

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  • Stuart UdisPro Member
    Attorney · Philadelphia · Member since 2018 · 2k+ posts · 3k+ votes
    2d

    @Owen Rosen The biggest miss in real estate with respect to insurance coverage is failure to use contract management to shift insurance responsibilities onto responsible parties. Whether it be PM or GCs failing to ensure vendors/subs have appropriate insurance with necessary indemnification provisions and additional insured endorsements covering themselves and the property owners or property owners' failure to ensure they are adequately protected. These steps greatly reduce the need to rely on insurance and keep loss run records cleaner. I chalk it up to an educational problem.

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