NREIG/Affinity Insurance & umbrella liability insurance

[Elizabeth Goff]

I have a couple of properties in Detroit that are insured by NREIG/Affinity.  I went to get an umbrella liability policy for my properties (these and also those in other states) with my insurer in California, State Farm, and they said that they could not do it given the way those policies with NREIG are written.  My friend that's with Farmer's in CA had the same issue.  Has anyone been able to get an umbrella policy over properties with the NREIG insurance?  And if so, with whom?

[Jason Bott]

Originally posted by @Shawn Woedl:

@Elizabeth Goff @Jeff T.

This is a common question we receive. It is most likely due to the type of umbrella policy you currently have. Many people purchase a personal umbrella policy to increase their limits of liability to their personal home, autos, and other items they may own. Personal umbrella policies are a cost-effective way for someone to do this. When investment properties are requested to be added to a personal umbrella policy, these coverage issues arise.

Investment properties should be treated as the business operations they are, and should be insured on a commercial premises or general liability form – please know that a residential non-owner occupied, vacant location or a location undergoing renovation (categorized as 1-4 family rental) are considered commercial risks by the insurance industry. These commercial policies are underwritten correctly for the exposures and risks these investment properties carry, which are very different from personal liability exposures. Some agents/carriers will insure an investment property on a personal liability form (which will most likely be cheaper), but cheaper is rarely better when it comes to insurance policies. This is most likely the reason your umbrella policy is extending over State Farm’s primary liability policy for those locations insured with them. Both your primary liability policy and umbrella policy are written on personal lines forms.

If you are currently carrying a personal umbrella policy, this policy form is unable to provide additional cover above a commercial premises or general liability forms (and vice versa). These two policy forms do not “communicate” with each other. The premises liability coverage you have through NREIG is written on a commercial form. There are commercial umbrella policies available for you to purchase that will provide additional cover above what our commercial premises liability form provides. Our coverage form we provide includes a $1,000,000 per occurrence and $2,000,000 annual aggregate limit, per location. These limits are higher than most personal liability policies, which typically come with a $300K or $500K per occurrence limit.

The question is, how much liability coverage do you want or need to carry? There is no right or wrong answer, and every investor is different. This should be based on your portfolio size, the ownership structure of your portfolio, any insurance lending requirements you may have, your past loss history as well as your general appetite for risk. These are all things your agent should discuss with you to design the correct coverage package for your investment portfolio.

This is just one possibility, but is also the most common scenario we see. I am happy to review your umbrella policy to confirm this is the case, and am also happy to answer any additional questions you may have. Please direct message me what day and time works best for you and the best way to reach you.

 Jeff & Elizabeth, I have several clients where we were able to place an Umbrella over the NREIG policy.  I'll drop you a note with the Umbrella info.

Keep in mind, the direct writers like State Farm, Farmers, etc, only want to go over their own policies.