Named Insured vs Additional Insured

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Named Insured vs Additional Insured

Kathryn Schauer
Investor · CT · Member since 2019 · 71 posts · 29 votes

Just purchased my first rental property.

The insurance company has a sort of a "Master Plan" agreement with the property management company I am using.  As such I get a quote that is cheaper than normal as long as I am using that property management company.

The Named Insured is the Property Management company, and the Additional Insured is my name.

When I questioned this, they said they set it up this way so that the property management company can file claims on my behalf, without having to wait for me as the owner to do it.  This property is out of state and the property management company apparently is used to very hands off investors.

First question:  Does this Named Insured vs Additional Insured seem like the correct setup?  What issues could this cause if there were a lawsuit of some sort?

Second question: My personal limit is $1M, and General Aggregate limit is $2M. Do these seem adequate? And if you had these limits would you still want an umbrella policy in addition? I realize you can't know how much someone is going to sue you for in the future for some unknown reason, but as a general rule, how much is industry standard for one SFH?

Thanks!  

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Jason BottPro Member
Insurance Agent · Nationwide · Member since 2014 · 2k+ posts · 1k+ votes
6y
Originally posted by @Kathryn Schauer:

@Jason Bott Thanks so much for the reply.  So helpful to know that this is common.

This setup prevented me from being able to get umbrella insurance through my personal homeowner's insurance company, however. They saw that the Named Insured was the property management company, which is an LLC and so they said they didn't offer any umbrella that would cover me.

Yes, you would need to get an Umbrella over just the property and the name on the deed.  If it is going over a commercial policy, minimum would be $400 for the policy.

The reason your insurance carrier will not go over the PM's LLC is that they could get pulled into any lawsuit filed against the PM, not just your property.

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  • Jason BottPro Member
    Insurance Agent · Nationwide · Member since 2014 · 2k+ posts · 1k+ votes
    6y

    @Kathryn Schauer

    This set up is common in the REI world. Most likely there is not a way for you to be an additionally named insured on the program.

    I don't know this program, so I am making an educated guess, but the main thing you are losing as an Additional Insured and not as an Additional Named Insured is the ability for you to make direct change to the policy.  

    When it comes to you being defended in a lawsuit, you will have the same defense as an Additional Insured as you would as the Named insured.

    Lastly, the limit of liability insurance is more a reflection of your risk tolerance, but I can tell you $1M on a single family is what most investors carry.

    1Reply
  • Kathryn Schauer
    OP
    Investor · CT · Member since 2019 · 71 posts · 29 votes
    6y

    @Jason Bott Thanks so much for the reply.  So helpful to know that this is common.

    This setup prevented me from being able to get umbrella insurance through my personal homeowner's insurance company, however. They saw that the Named Insured was the property management company, which is an LLC and so they said they didn't offer any umbrella that would cover me.

    0Reply
  • Jason BottPro Member
    Insurance Agent · Nationwide · Member since 2014 · 2k+ posts · 1k+ votes
    6y
    Originally posted by @Kathryn Schauer:

    @Jason Bott Thanks so much for the reply.  So helpful to know that this is common.

    This setup prevented me from being able to get umbrella insurance through my personal homeowner's insurance company, however. They saw that the Named Insured was the property management company, which is an LLC and so they said they didn't offer any umbrella that would cover me.

    Yes, you would need to get an Umbrella over just the property and the name on the deed.  If it is going over a commercial policy, minimum would be $400 for the policy.

    The reason your insurance carrier will not go over the PM's LLC is that they could get pulled into any lawsuit filed against the PM, not just your property.

    1Reply
  • Bill B.
    Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
    6y

    Did you try USLI for the umbrella? I don’t know if they can help in your situation but it’s how I use through my allstate rep because allstate wouldn’t cover more than 10 properties. 

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  • Kathryn Schauer
    OP
    Investor · CT · Member since 2019 · 71 posts · 29 votes
    6y
    Originally posted by @Jason Bott:
    Originally posted by @Kathryn Schauer:

    @Jason Bott Thanks so much for the reply.  So helpful to know that this is common.

    This setup prevented me from being able to get umbrella insurance through my personal homeowner's insurance company, however. They saw that the Named Insured was the property management company, which is an LLC and so they said they didn't offer any umbrella that would cover me.

    Yes, you would need to get an Umbrella over just the property and the name on the deed.  If it is going over a commercial policy, minimum would be $400 for the policy.

    The reason your insurance carrier will not go over the PM's LLC is that they could get pulled into any lawsuit filed against the PM, not just your property.

    As soon as they saw the name of the PM company as named insured the convo stopped.  

    So now I need to look for commercial umbrella policy providers?

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  • Kathryn Schauer
    OP
    Investor · CT · Member since 2019 · 71 posts · 29 votes
    6y
    Originally posted by @Bill B.:

    Did you try USLI for the umbrella? I don’t know if they can help in your situation but it’s how I use through my allstate rep because allstate wouldn’t cover more than 10 properties. 

    No I haven't.  I just called my primary home insurance company first.  I'll look them up.  Thanks!

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  • Matt Moylan
    Insurance Broker · Kansas City, MO · Member since 2017 · 370 posts · 127 votes
    6y

    @Jason Bott for a master policy like this PM's one, wouldn't their umbrella over the policy cover her?  Her policy would obvoiusly extend to her, but the primary liability and lawsuit would be sent to/through them (the PM) which the master policy would cover. . . . then the PM's umbrella policy covering the master policy would kick in.

    Isn't that right?

    Since there is no true policy in @Kathryn Schauer's individual name, it would be sent through the primary named insured.  Let me know your thoughts, Jason.

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  • Jason BottPro Member
    Insurance Agent · Nationwide · Member since 2014 · 2k+ posts · 1k+ votes
    6y
    Originally posted by @Matt Moylan:

    @Jason Bott for a master policy like this PM's one, wouldn't their umbrella over the policy cover her?  Her policy would obvoiusly extend to her, but the primary liability and lawsuit would be sent to/through them (the PM) which the master policy would cover. . . . then the PM's umbrella policy covering the master policy would kick in.

    Isn't that right?

    Since there is no true policy in @Kathryn Schauer's individual name, it would be sent through the primary named insured.  Let me know your thoughts, Jason.



    Matt, yes, but it sounds like the PM does not have an Umbrella and that is she is asking if their $1M/$2M is adequate. That was my understanding of it.  

    As for a suit being brought, it would most likely name the owner of the property along with the PM.  The PM policy would respond on behalf of both parties.

    As always we are making some assumptions without reading policy.  Hope you are well.

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  • Matt Moylan
    Insurance Broker · Kansas City, MO · Member since 2017 · 370 posts · 127 votes
    6y

    True and true.  An interesting dynamic for sure.  The suit, you're likely right, will name both.

    100% that we are making assumptions without seeing or reading the policy.  

    Hope you are well, too my friend!

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