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Updated almost 9 years ago, 01/07/2016
Insurance: Program Business for Single family rentals
I've been checking around with several Texas agents to to get insurance for 8 single family rentals in the name of the LLC that owns the houses. A couple of agents have suggested getting coverage under surplus lines. One of the agents referred to this as "program business". The agent presented a single policy that covered each of the properties (with a $10 million umbrella). When I received the policy (Producer was The Mahoney Group out of Arizona) the "Insured" was listed as Southwest Real Estate Purchasing Group, Inc. and Southwest Real Estate Property Group, LLC. My LLC was listed as an "Additional Named insured".
My Texas agent explained this structure as follows:
Southwest Real Estate Purchasing Group, Inc. and Southwest Real Estate Property Group, LLC are owned by The Mahoney group and are used to conglomerate all properties within the program. This conglomeration allows the ownership entities to be insured under their respective ownership names and reap the benefits of purchase power being grouped with thousands of other homes in the program. The master policy is written to Southwest Real Estate Purchasing Group, Inc. and Southwest Real Estate Property Group, LLC. Each insured within the program carries their own individual limits on their location. None of the limits are shared with other property owners.
Is this a reasonable explanation? Are such policies common? Should I be concerned that that my LLC is listed as an Additional Named Insured, while the Mahoney Group Entities are listed as the Insured? This is all a new concept to me!