Relying on home coverage liability to cover rental?

Question

Hey guys,
I am shopping for an insurance for our rental in TX, and the insurance agent proposed to NOT get 300K liability coverage, and instead rely on my home liability coverage to cover the rental. DIfference in cost for no-liability vs 300K liability for rental is 550$ vs 1250$/year.
What do you guys think?
Thx!
Edita

Kevin Romines · Answer

At Edita, Sorry I was out this weekend with a family emergency.

There are 2 ways that someone would have the liability set up on their rentals. One way is to have a landlord policy with the liability and medical on each individual rental that you own. With our company the liability section of that policy is typically about 100.00 of the overall premium.

The other way is to have the standard landlord / rental policy, only you dont have the liability and medical on that policy. The liability and medical is extended from the primary residence / home owners policy. By doing this in this way, you can get larger liability of 1,000,000 and medical of 25,000.00 and for each rental that you extend that to for less money. It will cost you an additional 15-18.00 on the primary residence policy for each liability extention. This saves you 82-85.00 per rental policy and gives them much better coverage levels. We dont have a limit to the number of rentals that you can extend liability to, so the more you have, the more you save.

I am a financial services rep. for Country Financial. Not all companies do it this way, however some do, we are one that does.

Kevin Romines · Answer

As an insurance agent, I can tell you the specifics of what is being proposed. We do the same thing all the time, however in our area, the savings in more like 100-200 a year per rental by structuring it this way.

The agent is just doing a liability extension off the primary residence. When I set my investors up with their insurance, I give them a million on the primary and then I extend that same million to each rental. Each extension is between 15-18.00 a year, vs. the individual liablilty on each rental being between 100-200 a year.

Its a great way to get very large coverage, at low costs and is done every day in our industry. If your agent or their company doesnt do this in this way, I would shop around.

Joe Bertolino · Answer

OLT = Owners, Landlords and Tenants Liability.  HO policies typically don't include it as they are designed for owner occupied homes.  DWF/Landlord policies include it.

Edita D. · Answer

Joe B. Thank you for making a notation of this :)
What is OL&T? I am assuming HO is home insurance :)
thanks!

Joe Bertolino · Answer

The liability extended from the HO policy may not include OL&T coverage that could leave you bare for claims against wrongful eviction, etc.

Edita D. · Answer

Kevin R. Hey kevin!
I contacted my home insurer, and was advised Safeco does not extend personal liability coverage to rentals... And maximum liability coverage I can get on my personal residence is 500K.

My question to you: if I shop around and find a company that would do it, will I still be able to get an Umbrella coverage for all my rentals along with personal residence and our cars?
Thank you~

Steve Babiak · Answer

We are evaluating insurance pricing and insurers at this time, so can't say at this time.

Edita D. · Answer

Steve Babiak Thanks Steve! I checked with my home insurance, Safeco, and they will not extend my personal residence liability coverage to a rental... 
I was thinking about getting quotes from other insurance agents... However, I was wondering if this will make much financial sense: all my time spent on getting these quotes vs savings I will get.

In your personal experience, was it more cost-effective to do it by extending personal residence liability? Have you ever compared the 2? (meaning, extending personal liability coverage to rentals vs each property having its own 300K liability)
Thanks~
Edita

Steve Babiak · Answer

I had such coverage with Liberty Mutual, but my guess it is possible with most that will provide owner occupied homeowner policies; ask the agent who insures your home.

Edita D. · Answer

Kevin R. Also, which companies would you recommend to check with? I am surprised my insurance agent did not think of this. This is GREAT savings!!!

Relying on home coverage liability to cover rental?

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