LLC or Umbrella policy

[Kenzer Hodgson]

Hello BiggerPocket Community,

I know this question has probably been asked before, but after searching the forums, I couldn't find a clear answer. My wife and I are starting our journey with our first STR and I wanted to ask: Should we use an LLC for our Airbnb, or would an umbrella policy on top of our current insurance policy suffice?

The mortgage is currently under my name, so I'm unsure what benefits, if any, I'd gain from using an LLC in this situation. Our main goal is to ensure we're properly protected.

Additionally, should we allow pets in our STR? I've heard conflicting views on this. Some say it increases bookings, while others mention concerns about damage and additional cleaning costs. What's been your experience?

I’d appreciate any feedback or insights you can share. Thank you in advance for your help!

[John Underwood]

Neither. 

If you need to do something to help you sleep at night, then do the umbrella policy. 

Having a mortgage and your normal STR insurance is already 2 levels of protection.

Very few people operate their LLC correctly and therfore this just gives them a flase sense of security.

Moving into a LLC can also trigger the due on sale clause. Talk about sleepless nights wondering if the bank is going ask you to write a check for the rest of your mortgage!