Insurance Policy on a LLC

[Jessica Vollendorf]

I'm looking for some knowledge around insurance. I own a rental property and it is a LLC. The property has 2 different units on it. The main house and an accessory dwelling unit. Each unit is rented out to different tenants. I am wondering what type of insurance policy I should be carrying on this property? And what kind of policy should I require my tenants to carry? Should I also carry an umbrella policy? Any recommendations of insurance companies? I'm located in Portland, OR.

Thanks!

[Jay Harding]

@Jessica Vollendorf, I spent 20 years in property & casualty insurance for whatever that's worth, however you should know that I sold my agency several years ago and I did not renew my licenses.

You should first have a "Business Owners Policy" covering your LLC's business pursuits, property etc, etc. Then of course you will need to carry "Homeowners Policies" on your properties, now the named insured on the homeowners policies will be your LLC if in fact your LLC owns these properties. Umbrella policies are always recommended if you have a large amount of assets you need to protect. Please be aware that all umbrellas are not the same, so you need to ask your insurance broker specifically which policies does the "UMBRELLA" go over? For example is your primary vehicle owned/insured under the LLC? If so it should be insured on a "Business Auto Policy" and you would for sure want the umbrella to go over both the Business Owners Policy & Business Auto Policy. If you're primary auto is insured on a personal auto policy and you are using the vehicle for business purposes you should read your policy to see what it says regarding coverage when/if it's being used for business, or call your agent/broker and ask them but make sure they put in writing whatever they tell you, like an email. If you use the vehicle to drive to your main job and only use it occasionally for your real estate ventures let your agent know this. Commercial Insurance contracts are fairly complex and thus I highly recommend using an independent insurance broker that represents multiple companies and writes a lot of commercial insurance. Regarding your tenants they should know that none of their personal contents, furniture, clothes electronics etc are covered under your homeowners policies and therefore if they want them covered they should purchase a "Renters Policy" and please note that the renters policy should come with some liability coverage should your tenants have guests over that get injured which is helpful to you especially in a serious accident where damages could be significant. The renter's policy should be primary coverage for their guests before your business owners policy limits would come into play. If you want to make sure that your tenants keep the policy in force you could ask them to have their agent/broker include an endorsement to their renters policy that is called the "ADDITIONAL INSURED" endorsement and the additional insured would be your LLC if it owns the property or yourself if you own the property, this endorsement will require the insurer to send the LLC or you copies of any cancellations or changes to the policy, you should know though that this endorsement cost's additional premium that the renter would pay.

Good luck . . .