Issues with homeowners insurance when transferring title to LLC?

[Chris Rendall]

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!