Do I have enough protection?

Question

Do I have enough coverage for my 12 rental properties

• All properties are under a LLC
• My home insurance covers up to 1MIL per occurrence
• They are managed by a professional management company

Not exactly sure if I am still exposed ? Should I get an umbrella policy to top it off?

Cameron Skinner · Answer

Account Closed

Just go to Sunbiz.org  that's the state Department of corporations website.  You can do everything online.

Account Closed · Answer

Thank you!

Account Closed · Answer

That is REALLY cheap...Where do you get yours from?

Cameron Skinner · Answer

@Adam Craig

In Florida it only cost about $120 to set up an LLC and then $75 a year to file the annual report.  IRS allow you to treat LLCs as a "disregarded entity" So you can file them on your schedule e on your personal return, so there is no additional compliance cost.  It's a relatively cheap effective asset protection tool.

Hope this helps good luck

Jason Bott · Answer

@Adam Craig 2 things to consider that have not been mentioned.

Your Personal Umbrella may not go over your LLC's.  You will want to confirm that with your agent and make sure the LLC's are listed on the Umbrella policy as Additional Named Insured's.

What limits of insurance does your PM have?  How does your contract with the PM respond to claims?  I have seen some PM contracts that are in favor of the PM and pushes liability back to the investor.  This may determine if you go out and purchase an additional commercial Umbrella policy to go over all the llc's.

To increase liability protection through your PM's policy, make sure they have $1M Errors and Omissions coverage and you are named as an "Additional Insured" on their General Liaiblty policy.

Cameron Skinner · Answer

In regards to the LLC depends on how much equity you have in each property.  If you are sued within the LLC they will have to sue win get a judgement and then foreclose on the individual properties, and pay off the loans.  I have multiple LLCs being carful not to have more than about 40-50k "equity" in each LLC.  You probably have liability insurance with your normal fire policy per dwelling usually 250k or 500k. Also your property management company should have a liability policy as well. Umbrella policy might be overkill, depending on your other personal assets and State laws regarding what assets are judgement proof.  Because your much more likely to be sued running someone over in your car than a rental house falling down on one someone.

Hope this help

Good luck

David Ferrette · Answer

Do you not have landlord insurance?

Chris Soignier · Answer

Yes and yes...which is why many investors segregate properties into separate legal entities.

Do I have enough protection?

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