Umbrella Insurance Policy vs LLC

[Thomas Sehon]

Just curious everyones thoughts on using an umbrella policy vs an LLC especially with an expanding portfolio?

thank you in advance!

[Stuart Udis]

At the end of the day, neither are effective without understand how they work and their limitations but if used correctly they can be used in conjunction with one another. Remember the LLC can be deemed worthless if you fail to operate your business in accordance with with the operating agreement. At the same time no matter how much excess insurance coverage you obtain, there will always be a policy exception for gross negligence and even negligence will likely be covered only under reservations of rights meaning the carrier can opt not to provide coverage.

Therefore your focus should be spent understanding how to operate your business in a manner that avoids conflict and liability exposure because that's the best line of defense. If you make a conscientious effort to avoid liability exposure you more than likely are operating your business in a manner in which claims will be covered by your insurance and your name will remain out of the docket.