LLC & Liabilty insurance questions

[Mic Nguyen]

Hello All, I have some questions regarding my LLC, liability, and insurance. I live in Florida and have an LLC with 3 free and clear rental properties deeded to it and have 5 financed rental properties in me and my wifes personal name. I was told by my insurance agents here that now that I deeded the properties to my LLC that liabilty coverage will not be included in my dp3 polices and that I now have to purchase separate liabilty polices. My 2nd question is, now that I formed the LLC and did my tax return, this is now a business income instead of just my rental income. They both transfer to my 1040 via schedule E but now on the LLC side of things the lender will not add back in the depreciation value of the property on the business. My last question, now that I have 3 properties in the LLC am I really that much protected? If someone were to get seriously injured on one of those properties above the liabilty covergage that I have, wouldnt the other 2 properties in the LLC be at risk? I know these are probably some detailed questions to ask, but as I see myself growing in the business, the more it confuses me and feels that I am at risk to lose more. Please advise if you know. Thanks

[Bill Gulley]

And there you have it, I believe you are totally correct. Another liability policy and yes, all properties are at risk as the assets in the company, a good reason not to be under insured. You might also look to your personal side as well, you are the owner of a company that has assets, they go after you personally as you were the guy that fixed the steps or ran over 12 kids and a nunn in a cross walk, they go through you to your company ownership value. RE probably won't qualify as tools of a trade to be exempt from judgments.

Quality of properties and management is the first defense, insurance is second, third comes any benefit, if any, by the business structure, after that you could be all alone. :)