Series LLC - which series holds the insurance policies?

Question

I recently established an Illinois Series LLC. I created a series for each rental property (single-family homes). I also created a "management" series that will sign leases, collect rents, and make repairs.

I am in the process of transferring everything into the name of the individual series. For example, the properties owned free & clear will be deeded to their corresponding LLC series. The ones with mortgages will be transferred once I pay them off or figure out how to avoid the "due on sale" clause. There are plenty of forum posts about that.

My question is in regards to property insurance. Should each insurance policy be in the name of the individual series? Should the master LLC hold all insurance policies? Should the management company hold them? What are the advantages/disadvantages of each? I'd also like to add an umbrella policy over each property.

I've spoken with my insurance agent but he wasn't very helpful. Maybe that's a sign that I need a more "investor friendly" insurance agent. Any help is appreciated. Thank you!

Rob Beland · Answer

The entity on the deed is the insured entity. The other entities are listed as additional insured on the policy.

Manvel A. · Answer

Hi @jamessyed @derekmartin When setting up your series llc, do you have to appoint a registered agent for each additional series? or just at the master llc level?

Nathalie G. · Answer

Derek,

I had the same question.  I have a NV Series LLC and have multiple series.  In order to avoid the due on sale clause, we placed the properties in a grantor trust and assigned the beneficiary interest to each Serie.  Did you find out about the insurance and who should be the named insured?  Thanx in advance for sharing.

James Syed · Answer

@Derek Martin

Welcome to BP.

I also have series LLC. You are in the right direction.

Your question about insurance, you need a General Liability Insurance (Commercial Insurance) which will cover all of your properties just like an umbrella policy. You must get additional coverage for your management company LLC as well as yourself because people could still sue you for your actions and if you only have insurance for your LLC, you will NOT be cover.

I agree with you that you need to consult to more like a commercial insurance consultant.

Don't be confused with umbrella policy with general liability insurance. These are two different breeds.

Hope it helps.

Derek Martin · Answer

Thanks @Will Porter & @Ivan  Oberon all good advice. But I have to believe there's other investors out there who have a series LLC and insure their properties. I'm going to call around to some other local insurance agents and see if they can help. At this point, I'm just looking for good information. I'll update this post if I find anything helpful.

Ivan Oberon · Answer

@Derek Martin although your situation is somewhat unique, it is not an uncommon concern for real estate investors who have multiple properties or projects going at one time, in one or more states and with multiple controlling entities.  There are very few, what you referred to as "real estate investor friendly" agents out there because most are not real estate investors themselves and therefore do not understand the many intricacies of this business and the ones that do, typically do not have access to the right companies and products.  I know this because I was an independent agent for more than 8 years before I got into real estate investing and I had to go outside of my own agency to find appropriate coverage and I was only able to find it with one nationwide agency.

We are real estate investors and every product we have created over the decades is by real estate investors for real estate investors.  The best way I know to answer your question is by letting you know that we can accommodate all of your properties, in any stage of renovation or occupation, include all of your entities as named insureds, add coverage in any state and do it all under 1 simple, monthly reporting policy schedule, managed and billed from one location and free from the need of having to make multiple down payments, multiple policies or location limits.  No one else does what we do so I cannot advise you as to how to have your current agent do it, because I know he cannot.

I am new to these forums so I want to offer as much value, service and assistance as possible but I am not sure how much info I can give publicly, etc.  I'm not sure if I can offer my contact info but I'd be happy to help.

Will Porter · Answer

I have NO idea, so take this with a grain of salt. But I suspect it might work, and would at least be a starting point for a discussion with your insurance agent:

The parent/holding company obtains the policy, then connects the other series companies as "Additional Insured" with the necessary paperwork and certificates. In theory I imagine that would enable the single policy to cover the others.

But maybe it really is simpler than you think... isn't this the whole point of an umbrella policy, anyway? To add a layer of protection to everything you have?

Series LLC - which series holds the insurance policies?

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