I am working on a rental property for college students. My concern is my personal liability. Does anyone have any suggestions as far as how much liability ins one should carry?Aslo I am buying it in my personal name, should I open an LLC to protect my personal assets. Thanks for the advice.
Insurance for a few million dollars is enough to satisfy most judgments or settlements.
An LLC won’t protect your personal assets if your personal actions caused the injury or you failed to properly supervise subordinates as there is no way to protect your personal assets from your personal actions. All you can do is minimize the amount a plaintiff can collect, but the typical stuff sold on the Internet or RE conventions for asset protection do a pretty bad job.
Risk management is more than insurance. It includes how you run your business. You have to have the property fixed up to perfect condition, next screen tenants to find out if they would be prone to misuse the property, repair anything reported in a timely fashion. In other words run your properties in a responsible manner. Anybody can sue anybody for any reason. The issue is can they win. If you can show that you run your business in a responsible manner they won’t win and the insurance becomes irrelevant. But if they do win in order to manage the judgment both lawyers have a very strong desire and incentive to not try to get a judgment for more than the insurance policy limit. If they go over that the amount of work they have to do goes throw the roof. The have to do asset searches future income projections etc. If you have an insurance policy of $1million that will pay for what a child’s life is worth in court. So you have covered the worst case and the judgment will tend to be there or less unless you are very badly negligent. I carry an umbrella liability policy for $1million.
Thanks for the responses. I am a newbie but from my initial research starting a LLC does not do much in the way of protection of personal assets or tax benefits.