LLC vs Liability Insurance vs Umbrella Insurance

[Gareth Lim]

I am a newbie buy-and-hold investor, and in the process of procuring my first rental property, a duplex. I want to make sure that I have the ownership structure set up well, to ensure the best asset protection.

I have heard a lot of recommendation to set up the property under an LLC, and have informed the lender & mortgage broker of my intentions to transfer the title to the LLC after closing - and they have no issue with that, as it they have seen it done frequently.

The issue I am currently struggling with is with liability insurance. The property will have a homeowners insurance that includes a Business Liability insurance for $2mil. I hear recommendations that I might want to have umbrella policy as well. If so, my understanding is that the LLC would possibly need to have its own "Commercial" umbrella policy that is separate from my current own umbrella policy.

My insurance agent suggested that given that I will only own one property, that for now, I should not bother with an LLC, and just have the Business Liability insurance tied to the home + my current personal umbrella policy.

Other option would be LLC + LLC Business Liability Insurance + LLC Commercial Umbrella Policy + Personal Umbrella Policy (which I intend to keep regardless) --- but the costs add up - thus, is this an overkill - what combination of LLC & Insurance would be best to setup for someone like me with one property, and possibly another one in the near future?