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Updated 3 months ago on . Most recent reply
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Issues with homeowners insurance when transferring title to LLC?
Hello BP Community,
As is very common I have friends who purchase their rental houses under their own name in order to get lower interest rate loans with better terms and also cheaper landlord insurance, and then they transfer the title into their LLC after closing.
Let me start by saying I'm not interested in discussing the merits of owning properties in an LLC vs your own name so let's not hijack the thread for that purpose :) What I'm trying to determine is whether or not there can be potential issues with homeowners insurance claims if they arise. Say you have a fire or water damage in the house and you have to file a claim with your homeowners insurance. With this particular method, when you purchased the homeowners insurance it would have listed you as the owner, but when the claim is filed your LLC would be the owner. Wouldn't this be grounds for an insurance company to deny your claim? Because let's be honest, they are always looking for a reason to do so.
I'm especially interested to hear from anyone who actually encountered this issue and how it was handled or who works in the homeowners/landlord insurance industry.
Thanks! I look forward to hearing from you!
Most Popular Reply
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@Yinna Wang Make sure whoever wrote the policy knows that one unit is being rented because there may be additional requirements. I doubt its a problem because if you told them a duplex im sure they assume you will be living in one and renting the other but its better to check. I have some great insurance people if you are looking for help. And if you have to cancel a policy for this you usually get the pro rated premium back so it pays to check and change it if you have to.