Installment # 8 Insurance Issues for The Real Estate Investor - LIABILITY Continued

[Ivan Oberon]

Installment # 8 Insurance Issues for The Real Estate Investor.

LIABILITY - Continued

The type of policy ("commercial" or "personal") can affect whether a liability exposure is covered.

As an example, the “generic” pollution exclusion found on most personal type contracts is addressed by some commercial policies to consider/cover pollution that emanates from a heating source (i.e. carbon monoxide).This is a greater benefit than you can imagine as your tenants even "alleging" that they got sick or injured can devastate you with defense costs, even if the ruling is in your favor.I have seen alleged injuries and sicknesses from pollutants in other situations and it is not pretty!

Also, to increase liability on a commercial form from the typical $300,000 you may be used to on a "personal" policy to even $2,000,000 is minimal (around $50 per year for the entire contract---regardless of number of units) with most carriers.

Not to mention you want to be sure to separate ALL "business" related activities from your "personal" activities.And guess what, anything that generates income for you, like your rental properties, is considered a business activity by the IRS.