I’ve read a lot about having umbrella policies to cover yourself if you own rental property in your own name. The problem is that dont most personal umbrella policies NOT cover business activities? Isn’t owning rental property considered a small business/activity. Or will it cover it fine.
From reading the policy, it had many stipulations about it only covering your personal issues. Like getting sued for a car accident or home accident. But not while conducting business. For instance if you get sued from a rental for an accident or negligence.
Any input? Or am I just reading too much into the details. This was with Nationwide. 2mil coverage for a little less than 300 a year.
50%,
I believe you are right. The personal umbrella DOES NOT cover business activity.
We have had to get a personal AND a business umbrella. The business liability umbrella is much more expensive and it was hard to find.
If you just have a few rental homes, why not just increase the liability portion of your OLT (Owner/Landlord/Tenant) Policy to $500,000 or even to $1,000,000 per house?
Please let us know what you find out. We all need to share insurance info. I just came from my insurance broker’s office. We pay about $9,000/year which is huge. I would be happy to learn how to cut that expense.
I called Progressive to get a quote, since I have my car insurance with them, and they told me they would do an umbrella liability on a rental property as long as I had at least 300K of liability coverage as part of the dwelling fire policy. But if they charge more for a rental house (on top of car + personal home), then what exactly are they providing for that extra cost?
They are providing liability coverage on the rental house. If you are sued (your tenant gets electrocuted plugging in his toaster due to your bad wiring) then the umbrella coverage goes into effect when the $300,000 on the OLT policy is tapped out.
My insurance broker says that often they settle for the amount of the umbrella coverage–1 million or more. Then they don’t have to sue or go after your personal assets.
OK thanks. I’m going to speak to them again and see if they’ll send me a sample policy so I’m sure exactly what’s covered and what’s not. I’m getting bogged down with stuff and need to get it wrapped up and make a decision.
You need to review specifics of the policy with your broker before you buy. When I was looking for an umbrella policy I had several companies refuse to provide coverage for the properties held in my LLC. Other companies didn’t have a problem with it. It all depends on the broker and the insurance company. I wound up with a policy that required $500K coverage on my automobiles and $300K liability on the personal and rental properties.
I’ve called a couple of agents at different compaines and so far they’ve said they’ll write it for the LLC, and coinsure in my own name well.
I assume that if you have more than one LLC, there’s no way to have one umbrella that covers them all?
I was told by all the insurance companies that I called that they won’t increase the liability part by more than 300K, and that I needed an umbrella for anything above that. They recommended getting a “true umbrella” vs. “excess liability” policy.
quote author=50% homes link=topic=43283.msg206220#msg206220 date=1244663658]
I’ve read a lot about having umbrella policies to cover yourself if you own rental property in your own name. The problem is that dont most personal umbrella policies NOT cover business activities? Isn’t owning rental property considered a small business/activity. Or will it cover it fine.
From reading the policy, it had many stipulations about it only covering your personal issues. Like getting sued for a car accident or home accident. But not while conducting business. For instance if you get sued from a rental for an accident or negligence.
Any input? Or am I just reading too much into the details. This was with Nationwide. 2mil coverage for a little less than 300 a year.
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re: business activity exclusion
I’ve been calling insurance agents to see what’s available and here’s what I’ve found: “business activity” seems to mean having employees, moving office furniture and equipment into a rental house, running a day care center from the house. The average small landlord won’t be doing any of those things.
I also have 4 rentals and pay all policies separate. I am not savvy on how to get better rate. I have a house worth 40,000 and the ins company says that I have to pay for replacement costs not what its worth. They consider sq feet and the cost to replace. I paid 18,000 and its worth 40,000 amnd they have it wrote up for dwelling coverage 122,000. The policy is 1492. a year and that doesnt sound right. When I owned it and it wasnt a rental it was only 422. a year. Any help?
What the cheapest way to have four rentals? Can you just have fire coverage on rentals without liabilty and med pay?
As a general observation, an owner occupied hazard insurance policy written for replacement cost coverage should be more expensive than a rental dwelling policy written for replacement cost coverage.
That said, I have seen the cost of my rental property insurance double in the last five years in my SC coastal area where there is a higher hurricain risk. By the way, my homeowner’s policy has also doubled in the twelve years since I bought the house.
You should have the option of having your insurance policy written for actual value rather than replacement cost coverage. Sometimes, replacement cost coverage is cheaper than actual value coverage, but you won’t know until you see the quotes.
You can reduce your premium now by increasing your deductible. If you have a $250 deductible, raising it to $2000 will dramatically reduce your annual premium. Raising the deductible even further to $5000 will reduce your premium even further but proportionately less for the extra $3000. You can reduce your liability coverage to the basic minimum provided without an extra premium but I don’t recommend this. I purchase $1 million liability coverage if available for each of my properties. The basic liability coverage that comes with the policy is usually in the $250K to $300K range. Increasing the liability coverage to $1 million only adds about $25 to my annual premium.
Shop the insurance carriers that service the area where your property is located. If you find a better rate, you may want to consider switching.
If you own condos, make sure you have the correct policy form. When there is a master hazard insurance policy provided by the condo association, you only need a condominium rental dwelling policy (an HO3 policy form) to supplement the coverage provided by the association’s master policy. HO3 policies are considerably cheaper than the HO6 forms that cover the entire structure.
I have the same issue with my insurance company writing the policy at replacement value. I paid 10,500. Rehab was another 7,000. Comps are 55,000. Replacement value is almost 200,000! But, my insurance is only 750 a month.
I hope that was a typo and you meant $750/yr. Try Foremost or GuideOne Insurance for Actual Cash Value policies. We use GuideOne and they’re very affordable. We insured a place today for $25K. The premium is $211 for the year.