Umbrella Insurance

[Account Closed]

Finally found a company ( Nautilus Insurance) that will write me a stand alone umbrella for 1 mil with having about 20 properties. Still debating because the price of 732.00 was a little higher than expected.

And still need to check what it is going to cost to raise my Auto policy from Bodily injury of 300K to the required 500K

This would be in addition to the 1 mil I already have on each property

Any opinions

Thanks

[Ivan Oberon]

Originally posted by @Account Closed:

Finally found a company ( Nautilus Insurance) that will write me a stand alone umbrella for 1 mil with having about 20 properties. Still debating because the price of 732.00 was a little higher than expected.

And still need to check what it is going to cost to raise my Auto policy from Bodily injury of 300K to the required 500K

This would be in addition to the 1 mil I already have on each property

Any opinions

Thanks

There are a few issues to consider here, chief among them is probably how you separate what are considered "business" activities and liabilities from your personal liabilities and activities.

The IRS considers anything which generates income for you a Business activity. It is irrelevant whether you own the property in your personal name, an LLC, Corp or Trust, etc...

The vast majority of insurance people out there do not understand this because the majority of them are not active investors themselves and because of this, provide incorrect information and either inferior products and in many cases, based on my experience, the absolutely incorrect product altogether. This puts their clients and themselves at risk.

Coverage for your rental properties needs to be written on a commercial form, underwritten as a tenant occupied dwelling and at least $1,000,000 in liability. You want to look for the flexibility to not be subject to Co-Insurance requirements or minimum earned premiums and varying choices in deductibles and coverage forms. You also want to be able to switch coverage on the fly between a property being vacant, occupied or under renovation as sometimes you might experience a longer vacancy than expected during a turn or have to do a more major renovation after many years.

Also, all "personal" policies and "personal umbrella" policies have what is called a "Total Pollution Exclusion." Many commercial policy forms allow you to "buy back" coverage for at least one type of "pollutant" that is pertinent to landlords. This coverage will offer defense and claims settlement for alleged or actual injury caused by CO2 emissions from a heating or air conditioning source.

You can add a "personal umbrella" to cover your personal liability exposures of your home and auto, if your net worth justifies it, but you should keep any income producing assets separate from your personal liabilities.

All that being said, it is easy to increase your limit of liability on all of your underline rentals from $1,000,000 to $2,000,000 for about $7/mo/location.  The first million will also run you about this much.  If you need to increase it beyond that, which with 20 properties myself and any asset protection attorney who knows anything about real estate investing will tell you yes, it can be obtained for a pretty inexpensive premium.

I would also suggest working with a company that can handle all of your rentals no matter what state they are in, synchronize your renewals and billing and give you the ability to add or delete locations at will with no new down payments and the security of working with experts who actually understand real estate investing.  Your ease of use and premiums will also be more favorable that way as well.

Hope that helps.

Ivan