Taking Title As LLC Caused Insurance Problems
Just bought a rental house and took title in my new LLC's name. Wanted to put the LLC to work. Now my insurance guy--my other properties are in my own name and are linked to my personal home--says that presents a problem, and insurance would be double the cost of just taking title in my own name. Other than Quit Claiming the property back to me--so much for the liability protections of the LLC--or possibly into a trust, anyone see a solution? Thanks.
I am facing the exact same situation. In the process of closing on a property and the insurance company is balking at having deed held by a partnership or corporation... My attorney suggests that if I as an individual "cosign" to secure the lien, then I as an individual may "insure" the property to protect my liability... technically... this is in-progress so I haven't proven this as workable yet --- will update for those interested...
but I agree -- so much for the supposed liability protections if the insurace is going to be 3 times as much to begin with... (effectively they switch the policy to commercial)
Hold the property in trust and have LLC listed as the beneficiary. Double-set of protection, and insurance won't know that LLC is the benecifiary.
I was facing the same problem but I called several people and finally a property manager gave me the name of a company that would let it be in the name of a LLC. Just call some property managers and they will be able to help you.
--------------------------------------------------------------------------------
I have been having problems finding a bank that will finance a property for an LLC. I am told that it is very hard to put property into a new LLC. Any sujustions on how to proceed?
You shouldn't tie the exposure into your homeowner (personal liability) protection. Most carriers won't extend the liability from your home to more than 4 units anyway. Increase your deductibles considerably to offset at least some of the higher premium.
Your rentals are your business and should be insured as such. You need to find an Agent that will shoot straight with you and help you understand the big picture of your OVERALL coverage scenario...
You need to find a commercial insurance agent to help you. One that deals with business insurance only.
I like compwhiz's idea. Anyone else done this?
JohnCl
Whatever you decide to do, make sure the insurer is aware of all entities and parties involved. Believe me, if you have a loss, especially a large one, the insurer will certainly look for a way NOT to pay...
Norrist - well said.
Remember the point of insurance is the coverage when something happens. Getting too fancy with potential law suit protection while ending up with no fire coverage would be a bit of a problem.
John
[ Edited by JohnMerchant on Date 06/13/2004 ]
I just got this issue resolved on Thursday for a duplex in contract.
SHOP! SHOP! SHOP.
after shopping 2 of my favorite brokers, I was shot down. Loosing a deal over lack insurance? WOW!
Someone in another thread suggested a company in MI (forgot the name). They aren't licensed in CA.
Long story short, I now have three quotes, 2 from commercial insurers and one from state farm.
The trick that State farm will let you take is issue the policy personally, and name the LLC as an additional insured.
The "trick" could cost you. It sounds like the Agent is writing the policy incorrectly, and for that matter, exposing you personally to liability issues. The point of the LLC (main point at least) is to LIMIT your (personal) LIABILITY. By writing the contract in your name, the Agent is dragging YOU back into the exposure...contradictory at best.
As well, the titled owner of the property (some exceptions to this, i.e. management company) should be the 1st named insured to adhere to insurance contract parameters.
Keep shopping. Not so much for an Agent to do it, but for one to do it correctly...
My 2 cents...
The frog knows best. Get you a commercial agent that knows there business and write a policy covering all at once. My agent said a land Trust was a great idea and as long as it was us (LLC Landtrust or S corp) that owened tha property it was all the same.
Best to you Sire
It's a company approved trick.
It's a Owner Oc, the my name is there as a tenant, and the LLC and banks are here as indemnified party.
The personal risk that I have (might) have exposed myself to is the policy limits of the insurance. I'm not on the title.
Besides, I kept the email where she asked her district manager if it was ok.
Save every email.
Best of luck, but the District Manager and the Agent are both part of the "Sales" Department. It wouldn't hurt getting some confirmation from the claims or underwriting departments.
Sorry to sound paranoid, but I have seen the denials occur because a policy was written by an Agent just making the sale...[ Edited by norrist on Date 06/14/2004 ]
I agree with Norrist. I was the victim of a poorly written auto insurance policy where the company simply apologized for the wrong information that was given to me by one of their agents (who conveniently was no longer with the company).
Luckily for me, the issue was caught before any claim had to be made and simply resulted in an increase in my premium. I would verify with underwriting just so that you don't fall victim to an overzealous slaesperson.
Thanks for the tip though, I am in the process of changing over one of my rentals to an LLC and had no idea it could affect my inurance. I will have to look into the issue more carefully before I commit to such a achange.
JS.
yeah. The other point I didn't mention, is I'll only holding the property 2 mo before flipping. lowering the risk of a claim.
Thanks for the replies. I shopped around a bit and found another agent who would write it separately as a commercial/rental property, wasn't much more than if I was an owner-occupant.
If the district mananager and the agent put it in writing that it was covered then IT IS covered if not thru the company thru their e&o insurance.
Quote:
On 2004-06-15 20:31, TNTRASH wrote:
If the district mananager and the agent put it in writing that it was covered then IT IS covered if not thru the company thru their e&o insurance.
I agree, however, I wouldn't want to wait the weeks or months for the E & O carrier to settle...seen it...
Quote:
On 2004-06-11 14:16, estinc wrote:
I have been having problems finding a bank that will finance a property for an LLC. I am told that it is very hard to put property into a new LLC. Any sujustions on how to proceed?
8-)
Washington Mutal Bank will allow you to use an LLC, but you will have to sign the note. Washington Mutal is located in Seattle, they should have branches all over the US.
When I take title in my LLC and get insurance, I always get it in my name DBA my LLC. That way I am totally covered and get a discount on the insurance because I always use the same company as my own home and vehicles.
Dennis-Not to sound cynical or short, but your policy may be written incorrectly for a couple of reasons. Inherently, the deeded owner (in this case your LLC), should be the first named insured. Your insurance contract dictates this, in most cases. It also sounds like you are tying personal liability into your business (LLC) exposure. This may offset the liability protection the LLC provides by connecting the 2 entities. Just my 2 cents...
[ Edited by norrist on Date 06/18/2004 ][ Edited by norrist on Date 06/18/2004 ]