All Forum Posts by: Casey J Burkhead

Hey Edwin,

The main reason investors use an LLC is to protect their personal assets. So I typically advise my clients to purchase a policy solely in the LLC name when applicable. Otherwise, your personal name is listed on the policy and leaves an opening for the LLC protection to be pierced. The LLC is the named insured in this case. As you mentioned, you can purchase a policy under your personal name and have the LLC listed as an additional insured. You would both be named insureds in this case. If you are finding it to be more expensive to purchase a policy solely in the LLC name, I would say keep shopping. Find an independent agent that has multiple options in the whatever state your property is located. I work with a regional carrier that offers very competitive prices for investors in our tri-state area and only requires the LLC name to be listed.

- Casey

It's not a big deal at all and these types of properties are common investments.  Your broker may not have access to carriers that can write this but many independent agents do.

Stephanie - are you purchasing the property under your personal name or a separate entity?

Hey Elizabeth - there are a lot of knowledgeable insurance agents on BP.  If you let us know the State the property is in, we may be able to make some suggestions.

Hey Ryan,

That's absolutely something that can be done but you are most likely looking at a Businessowner's policy or Commercial Property Package policy in that case. I have several clients that package their rentals on a BOP under the name of a Trust.

Hey Ian,

You would purchase a standard homeowner's insurance policy in this instance. It would cover the dwelling, other structures, *your personal property, loss of use, *your personal liability, and med pay. As with any other rental property, you would want to make sure your tenant for the other unit carries their own renters insurance that includes personal property and liability coverage.

Some insurance carriers will allow you to lower the amount of other structures coverage (B) if you don't need it but most automatically default it to a certain percentage of your dwelling coverage amount. The same is true for personal property and loss of use. Check with an independent agent and see if they have access to a carrier that allows you to adjust those limits. Travelers is one of the carriers we have that allows it.

In regard to the value for the dwelling, I would recommend insuring it for the full replacement cost. Your agent would determine that using a replacement cost estimator and the facts about the home (square footage, frame v masonry, etc). I would suggest a minimum of $500K in liability coverage and $5,000 in medical payments if $10K is not available.

I'd be happy to answer additional questions if you have them.

Thanks,
Casey

Hey Grant,

Tony is right, there are quite a few options for this kind of set up.  Some may require a little more work on the Agent's end.  It may require the Agent to manually invoice the mortgage companies for future renewals for just the portion of premium for certain properties, but it's not a huge deal.  We do it all the time.

Hey Chris,

The first question would be: will you be living in one of the units?  If so, then you would want to purchase a homeowner's policy.  Even though there will be two other tenants, you still want coverage for your personal property.  Also, insurance companies rate homeowner's differently from landlord policies due to the fact that you live there.  If you won't be occupying a unit and at least one of the units is occupied by a tenant, you will want to purchase a landlord dwelling policy (there are other options besides a landlord policy but I won't get into that here).  Most companies have different levels of liability coverage that are included on the homeowner's / landlord dwelling policy.  $100K, $300K, $500K, and sometimes $1M are the options.  In my opinion, the minimum you should purchase on a 3-family property is $500K in liability coverage.  When it comes to the umbrella, it just depends.  I tell my clients to determine how much they have in personal assets - if they have more than $500K in personal assets, I always recommend an additional $1M umbrella.  This would give you $1.5M in liability coverage for the property.  Since it's your first, that may be too much or maybe it's not enough.  It depends on how much you stand to lose if someone were to sue you for personal injury.

- Casey Burkhead
burkhead.insure