Liability insurance - how much is enough?

[Mark Yuschak]

We own a few rental properties in Michigan and have notes on each of them.

Currently we carry 1.5 million of liability coverage on each property (500K base, plus a 1 million dollar umbrella). We would like to put the properties into each of their own LLC and drop the umbrella policy, but the lender's won't allow us to do so.

So, what are your opinions on how much liability coverage is appropriate? Are we over protected with 1.5 million? The bad economy is really taking a toll on our cash flow and we're looking for ways to cut costs. Dropping that umbrella policy would save a good chunk of change, but at the same time I don't want to open ourselves to a risk.

I've been told by a couple different people that you can only be held liable above and beyond your liability coverage to the extent of the equity in the home. Thanks to this economy there's next to none in these properties.... :roll:

[Mark Forest]

I know this is not a thread on holding title, but since it has come up in relation to asset protection I will recomend the flowing article by John Reed http://www.johntreed.com/entity.html

He makes some good points.