Rental Property Insurance question

[Julien Bartolo]

Hello everyone - I am currently in the process of acquiring my very first rental investment property and hoping to close in the next 30 days.  Property is located in York, PA, but I do have a few questions with regards to rental property / umbrella insurance coverages as this is all still quite new to me:

1 - Insurance coverage varies greatly based on property type, size, finishes, location and numerous other factors but curious if there is a specific type or amount of rental property insurance or coverage I should be inquiring about?  First quote I received was for $1,700+ per year.  Property is located in York, PA, 5 bed, 2 full bath remodeled townhome, 1800 SF, nothing extremely fancy, brick front and pretty standard finishes.

2- I also inquired about Umbrella insurance coverage and curious if a million dollars in coverage is a good amount most typically start with?  Seems fairly affordable at around $800/year.

3 - Can anyone please share comments or feedback based on their own experiences when it comes to investment property insurance?  I am more concerned about protecting myself and my assets than the cost but am curious about how others in the investment community have handled this need.  

Side note: I am also in the process of meeting with both my CPA and estate planning attorney for both planned tax breaks / benefits and rolling tis and future investment properties into LLCs etc.  I am also aware that insurance is a business and do plan to shop around but hoping to be a bit more educated on the next call.

Thanks everyone in advance for your valuable feedback.  

[Nathan Gesner]

Quote from @Julien Bartolo:

People protect themselves by setting up an LLC or using umbrella insurance. Either is a valid option, but umbrella insurance is simpler and probably cheaper. Setting up an LLC has an up-front cost, additional steps to maintain protections, and requires a separate tax return every year which costs more.

Here's the truth: the vast majority of all lawsuits against private Landlords are security deposit disputes or minor injuries that would be easily covered by your standard liability policy. I've been on these forums for 12 years and haven't found a single investor that lose a lawsuit that cost them more than their insurance would cover. The cases you do hear about in the news are from slumlords, Landlords forcing tenants to have sex, or other egregiously bad behavior.

You have bigger fish to fry, like learning how to obey the law and treat your tenants fairly and honestly so that you avoid the lawsuits. Get your standard insurance, buy a $1 million umbrella, and then spend a couple hundred dollars and some time educating yourself on State/Local laws, Fair Housing, how to screen applicants, how to deal with unpaid rent, etc. That's your real protection.

Do yourself a favor: buy "Every Landlord's Legal Guide" by NOLO. Written by attorney investors, it's full of practical advice pertaining to management of investment property, has sample forms that can be edited, and - most importantly - they tell you what your primary state laws are and where you can read them. It's updated every year and is the best $40 you'll spend as a Landlord. There is one book for 49 states and a separate book for California.