Liability Insurance for RE property deeded into LLC

General Real Estate Investing
1

Hello All,

I am a beginner RE investor. I am in the process of transferring my investment rental property into an LLC (for better shielding and protection of other assets).

I understand the due-on-sale-clause issues and low risk of my note begin called, so long as I keep up payments.

But how do I handle property insurance? It is currently in my name. If I cancel the policy and open a new one in the name of the LLC, the bank will surely find out, and potentially call the note.

Is there another way that is typically taken? I read somewhere that it is sufficient to just add the LLC as a “Named Insured”?

Any thoughts, guidance?

Thanks so much.

2

what do most RE investors do when they have the financing in their personal name, and deed the property into an entity (other than a land trust)?

3

Even though your question is asking about liability insurance, I am guessing you are really asking about the hazard insurance policy.

If you already believe that your loan has a low risk of being called if you keep the payments current, then what is the problem with the lender seeing that you changed the hazard insurance?

As to whether your insurance carrier will accept your LLC as an additional named insured is up to the insurance carrier. You have to ask how they will insure your property under your LLC name.