LLC, Umbrella Policy Questions
I have a few questions about LLC:
1) Where LLC and property connected. On the mortgage?
2) Pro and cons of using Umbrella Policy instead of LLC?
3) On Parent/subsidiary LLC setup, where there correlation? By putting parent LLC as member of Subsidiary's LLC? That's all?
4) Don't you think, creating separate LLC for each property is overkilling?
5) With parent/subsidiary LLC structure, under which name is my umbrella policy? Myself, parent LLC, subsidiary LLC?
Thx.[ Edited by ew86 on Date 03/08/2004 ]
As for #2, you would use the umbrella to protect the LLC, not to replace it. The umbrella is a liability insurance contract. It is, in most cases, used to give additional coverage over the underlying policy (if one exists). The LLC is an enity form used for, among other reasons, protecting personal assets from liability exposures that are not "personal" (i.e. investment properties, etc...). It would be short-sighted to leave the LLC unprotected.
My 2 cents...
Tim [ Edited by norrist on Date 03/08/2004 ]
MOst umbrella policies will cover a single entity. It will not cover properties you own personally, and properties you own with AAA LLC, and properties you own in a SMITH FAMILY LAND TRUST, etc. YOu would need a seperate umbrella policy for each name in which you hold title.
Brenda is right on. You can get a personal umbrella to cover your house, cars, boat, etc... To get the additional liability protection for your LLC, though, you need an umbrella with the LLC as the named insured. Rule of thumb: If it's a different entity, it neeeds its own insurance... Good luck!
Tim
Understand that first you need primary coverage to have an umbrellas policy. Think of your prmiary coverage as being a sponge. The umbrella policy uses your primary coverage as a deductble. Then the umbrella will fill the open spaces that exist in the sponge - your primary coverage.
So if you have say, 500,000 primary coverage the umbrellas policy will not kick until that 500k is spoken for. Or, if the primary does not cover certain things, some umbrella policies will filter down and pick it up.
ALL policies had a Named Insured that is the person or enity who paid for the policy. Then polices have plain "insured's" You need to read the policy to learn who they may be. It's best to discuss this with your agent.
Thanks for the responses. I understand the purposes of Umbrella Policy. The part that I don't know is if I should have umbrealla policy for each subsidiary or parent only is good enough.