Insurance In LL Name Probelms
I have run into a wall with getting ANY ins broker to be able to have it in the LLC's name right from the gate. The transfer after the closing is sort of an iffy subject too. How are we to get the ins out of our personal name? Does this legally open me up and allow the piercing of LLC "corporate veil" for personal liability if the INsurance has my own name on it? I agree..isn't this co-mingling personal and LLC which can open this vulnernable underbelly?? How are people doing this in their investing experience?
It can be done, but it is not easy to insure when held in an LLC. We do it all the time when working with clients' reverse 1031 exchange transactions, but it is always difficult in working with the insurance agent/company. We always have to explain what we are doing, etc. In many cases, we have to compromise by having the insurance company name the individual as the insured and the LLC as an additional insured. You would have to ask a legal advisor as to whether this would assist in piercing the corporate veil, although my gut reaction is that it will not because you are also the sole member of the LLC and probably the managing member. You just have to keep calling agents and explaining what you are doing until you find someone that is willing to go the extra mile and get the insurance companies underwriting department to approve it.
[addsig]
Thanks for the info Bill, I appreciate the feedback. I sort of knew from going through the entire yellow pages it will be a problem. But your input is great!
what about putting the property into a land trust and then give the LLC a second mortgage/lien against the property. THis would "strip the equity" from the property itself and in the event of a lawsuit you would "appear broke" no equity in property, no contingency lawyer will want to sue you if you don't have visible defined asssets. IF you put the property into a land trust (not named after you) when an asset search comes up they won't see you and if they do see the property after a strenuous search they will see that there is really no equity in it as the LLC has a second (or third) on the property.
Just a thought
Randall
[addsig]
Good thinking...I like when people think outside the box. I will consider looking into this with my attorney and tax advisor. I wonder if this will also strip me of tax flow through benefits of LLC's. Worth a look though!
If you are still having problems with this, please contact me. Our agency works with RE investors in 14 states. We are very familiar with this situation. Thanks!
I've not even had anyone question that when during my search for an insurance agent. I even mentioned this up front. So far my builder risk insurance policies for rehab have been in my corporation name.