Insurance Protection AFTER Sale?

[Stephanie D.]

I've just joined today after discovering BP two days ago. Wow! What a wealth of information!

My husband and I are under contract for our first rehab property (well, our first rehab for income producing purposes - we've done a few rehabs on our personal homes). I'm having trouble deciding on two things: insurance & whether or not to form an LLC.

I have poured and poured over the forums to research insurance recommendations, etc. From what I've gathered, I've deducted that we need a Builder's Risk Policy to cover the property itself (that perhaps goes over to a Vacant Home Policy after the rehab - although REIGuard says we have 3 months after the rehab to sale before needing to switch to a Vacant Home Policy) in addition to liability of course (do you guys prefer bundling this with your Builder's Risk and/or getting an umbrella policy with your personal insurance agent - we have homeowner's & auto insurance with State Farm?). I've also determined that any contractors we hire to do work will need to provide proof of liability and worker's comp. However, I'm having trouble finding out if any of these policies would protect us AFTER the sale of the property. Let's say something goes wrong after the homeowners move in and they decide they want to sue us for a new problem that has occurred  (no, we are definitely NOT planning on cutting corners but we also realize that things can go wrong after the property is no longer ours). Is there insurance coverage to cover legal fees in this situation? It's my understanding that the coverage ends when the policies on the property are terminated after the sale. I'd love to get information/opinions on this!

On the LLC, I am beyond torn on this. My husband and might want to "flip" 1-2 homes per year if this one goes well. We would by no means be high volume flippers if we continued doing it. I've read so many passionate posts here from both sides. I've read that the LLC will hardly protect you if you personally work on the flip and do a lot of the work (we plan to) and that its not recommended to form an LLC until after your first flip (or few). I've also read its easy to pierce the veil on LLC's and that you will somehow end up getting sued personally anyhow - especially if you are "the face" of the flip (we will be actively working on this flip). But I've also read posts from people who say its silly not to have an LLC in place. But I'll tell you this: I have no idea how to manage an LLC (recording minutes, etc.). I'm great at keeping track of expenses, income, getting my hands dirty on a remodel, etc. but as far as running a corporate entity? I'm not so sure. I don't even know what it entails.

I'd love to hear thoughts/recommendations. I realize we are newbies but I do want to do my best to make sure everything is done right and that we are protected. Thanks in advance!