LLC vs umbrella liability insurance

Get Legal Help Today

Compare Quotes From Top Companies and Save

secured lock Secured with SHA-256 Encryption

LLC vs umbrella liability insurance

My email janey10yahoo.com
Thanks for taking the time. I live in CA and buy a single house family home in FL for rental purpose. This is my only rental property without other business. It is in my name alone. For protection, I’m considering LLC or umbrella liability insurance. Will LLC protect me by limiting the liability to the rental property? What kind of LLC should I get? Is umbrella liability insurance a better choice? Please help

Asked on June 3, 2016 under Real Estate Law, California

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 7 years ago | Contributor

The answer is "yes"--you do both. A LLC will protect your personal assets from the majority of liability related to the business's or property's debts, such as if through not fault of you *personally* someone is injured, or if the LLC owes money to a contractor, an accountant, for utilities, etc. But it does not protect against amounts you might owe if you  personally do something wrong (e.g. if you accidently knock a tenant's teeth out with a 2 x 4 while doing renovations); or from any debts you personally guaranty; or from certain tax debts; or if someone looking to sue you if they can "pierce the corporate veil" and show that due to the way you comingled LLC and personal funds and otherwise failed to "respect" the independent existence of the LLC, that the LLC structure should be disregarded as being just a pretense. Having an umbrella policy will help protect not just you personally from any debts which might be able to bypass the LLC, but will protect the LLC and the property it owns, which are valuable assets of yours.
In terms of LLCs: in my experience, for a sole member (owner) of a small business, the best form is an LLC which elects "partnership" (not corporate) tax status; it will be "pass through" entity, which means that profits and losses are not separately (and additionally) taxed at the LLC level, but rather "pass through" to you and are only taxed once.


IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although AttorneyPages.com has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

Get Legal Help Today

Find the right lawyer for your legal issue.

secured lock Secured with SHA-256 Encryption