Assets Protection/Insurance/Attorneys

[Cedric Washington]

I have been an agent for 8 years, Broker for 3,  Investor for 3 years

My new business partner and I currently own two rentals and have completed 3 flips for 2015-2016.  I have been trying to figure out the best way to protect assets.  We provide a quality product but risk is always there of being sued.

Questions:

1.  Insurance  

Is business liability insurance the same as what is provided to construction contractors for protection if sued.  I have looked into doing remodeling projects as well for homeowners and the state of Louisiana requires you to carry general liability and workers comp for projects.  Would that coverage be considered Business Liability Insurance as well or would we need two types of coverage for protection?

2. Multiple LLCs

I have read many scenarios and each has been  a little different.  I understand the rationale behind have each property in a different LLC, but it also seems very complex at times.

For example, would we need a separate bank account for every single property, separate liability insurance for each as well?  I mean if you own fifty rentals and flip 20 properties, that would be a lot of LLCS and Bank Accounts, =)  

Thoughts .......

[Kevin Romines]

Commercial insurance has general liability as well as completed products and operations. To give you an example of completed products and operations - Lets say your a cabinet builder and installer. You build and install the cabinets of a home. 2 months later that cabinet falls off the wall, hits someone on the head and causes damage and medical expenses. This would be covered under completed products and operations. It could be covered under general liability, but that's up to each insurance carriers claims dept.

If you are in the business of flipping properties, you need a BOP business owners policy, this protects the business, and then you should insure the properties either on personal lines policies or commercial policies. The BOP policy is separate from the home policies. I like to set up the BOP which is a commercial policy and then insure the homes on a personal lines policy followed by an umbrella even if in the entities name. There are some limitations in that with our company, we can only do a max. of 20 properties on personal lines. The primary insured must be an individual with the entity listed as secondary insured, and additional insured on the home policy and the umbrella. Most companies don't do things this way, but Farmers does.

As far as multiple entities, unless you have a company like ours (not the industry norm) that allows an entity owned property to be insured on personal lines, then yes you may need individual commercial policies to go along with each entity that holds property?