So today I was talking with two insurance companies. I learned the following:
1 - if you buy property in the name of your LLC, you do need to have either an umbrella business liability insurance which seems to be expensive ($500 for a $2MM policy); or you can have the liability insurance in each property policy ($20 more for a $2MM coverage). A personal liability insurance would not be needed. ← what are your thoughts about this? Would you still get an umbrella personal liability insurance? Or get only the liability insurance to cover the property in the name of the LLC?
2 - any recommendations in terms of good insurance companies? I talked with AmFam where I have my home and autos; and State Farm - business associate of our local AZREIA. I was thinking about talking with at least 2 or 3 other companies and would appreciate any referrals you may have.
I have all my rentals with Foremost Insurance. The properties are all in LLCs and I am listed as additional insured (personally) on the insurance policy (along with the LLC). I do not have an umbrella policy and my understanding is that umbrella policies will normally only cover about 5 rentals (certainly not dozens).
I have a $2M personal umbrella policy that covers my personal residence, a rental property in my personal name and a second rental property owned by my LLC, and 3 cars and 3 drivers (me, wife, son). The umbrella is through Selective Insurance.
Additionally, each of the properties has their individual liability. Selective required reasonable high limits of liability on the autos and individual property insurance. However, I shopped quite a bit for good rates and this was the best deal I could find.
I upgraded my insurance because I have considerable assests to protect and the LLC does not protect you from every liability especially if you actively participate in rehabbing and maintenance, and my son turned 17 and got a drivers liscense.
Foremost operates in AZ. I located 5 local agents. I will call one of them tomorrow. Selective doesn’t seem to operate in my area. Thank you for sharing your insurance coverage. It will help me decide what to do.
I also got good feedback from another investor on the local REIA business partner that sells insurance for State Farm. Like jmd_forest, I want to shop around to get a good coverage for a fair price.
You need business and personal liability insurance. Business insurance doesn’t cover you for liability associated with your actions outside the scope of business (i. e. car accident while buying groceries).
I 2nd Foremost insurance. I have not had any claims with them, but they are the best price in town, backed up / owned by Farmers Insurance, they are HIGHLY rated (A+ or something like that) and Mike (a successful single family home investor) endorses them. So I have them on my “couple” properties. And I’ll use them for future properties.
To signup with Foremost, visit http://www.foremost.com/ and call a few local agents in your area. I found a couple guys that I spoke to were not interested in making an effort to get my business (no callbacks or a very slow callback). But one guy - who I chose - acted like my little policies are food on the table for him. He is awesome, and provides great service.
Also sit down with the agent and have him go over ALL of your coverage options. There are tons of things you may and/or may not need. E.G. Foremost does offer mold coverage, but it is VERY expensive here in Texas, so I declined it. My agent also recommended that I do not get it. Apparently mold lawsuits are way down because most ins. companies don’t carry it - period. Anyway also things like flood coverage, how much personal liability, etc is something you’ll want to talk to him about. Good luck
motivatedceo - thank you. I did get a quote today from a local agent. He was referred to me by a local investor that I met at AZREIA. He was very friendly and responsive. I liked him.
He quoted me a regular Farmers Insurance policy and a Foremost policy. Farmers does not insure vacant properties (not even during the first 30 or so days when you are rehabing the property). Their price was the best so far. Foremost price was not the best but he quoted me a special policy for vacant property. The problem is that the maximum liability their offer is $500k. I would feel more comfortable with at least $1MM.
At this point the best policy overall seems to be with State Farm through a local business partner of AZREIA. They allow the property to go vacant up to 6 months and the minimum liability coverage they offer is $2MM. I am leaning towards them. I will setup a meeting with him on Monday to go over the details.
Thank you all for the feedback/information. Have a good evening!