Tranferring Ownership to LLC - What To Do With Insurance Policy?

[Brad Noe]

This may be a dumb question but, if we are doing a Quitclaim Deed to transfer ownership of a property over to an LLC, should we also change the insurance policy from our personal names to the LLC name?

[Lynn McGeein]

If you have a mortgage on this property, search these forums for due on sale clause or LLC vs umbrella, or just insurance LLC. Lots of good advice on older threads. My take is if it's owned free and clear, transferring to an LLC and changing the insurance can be a good tool to protect yourself, but it can trigger transfer taxes if applicable, and in some states that can be expensive. If there is a mortgage in your name, once you switch the insurance to the LLC, your mortgage company will likely be notified by them of the change in ownership, which may trigger your due on sale clause.