House that is titled in the person's LLC

[steve32]

I have a client that I just found out his home is titled in his LLC (for tax purposes). So, do i add the LLC as an additional interest?

What do you recommend?

[Santa Rosa Ins Broker]

If the house is titled solely in the LLC why would you not change the first named insured to the LLC?

Since the LLC(if they own 100%) has the only insurable interest in the house, in my opinion they should be the first named insured. Since the LLC probably does not own the contents, see if the undewriter will leave the Individuals as named insureds on the policy as well for the contents coverage and personal liabilty coverages. Otherwise a renters insurance policy probably would be needed for the individuals Contents and Personal Liabilty coverages. When I have run into these situations they tend to have many issues. Then trying to get an Umbrella over them also becomes and issue. LLC are considered commercial entities by most carrier, who then refuse to write a Personal Umbrella for a commerical entity. If you try to get a Commerical Umbrella over a Personal Lines Policy you have the same issue.

I have the same situation going on with a Corporation/Developer that still owns 4 Townhome Units in a Planned Unit Development. Project was done under an OCIP and the premise/ops ended when the notice of completions were filed.

Keep us posted

[simiinsuranceguy]

In my experience with high end clients that have homes in LLCs, no Insurance Company that I spoke to will allow an HO policy with the LLC as the named insured. You must add the LLC to the policy as an Loss Payee and Additional Insured. That is the same if the home is titled to a Corp, LLC, Trust or Partnership.

[kevinraz]

Personal policies cannot have a business entity as a named insured. They would no longer be a personal policy then, would they?

Someone here got it partly right: get a renters policy for their contents & liability. You will need to get a commercial policy for the dwelling itself, it'll cost a bit more but that's about the only way to do this.

These rich morons want to do this for "tax" purposes, makes me glad I'm no longer handling PL. I got tired of boats, motorcycles and the kids cars all in the business name, then they scream when premiums soar due to this weird stuff. Also it might not be a good idea to have this exposure attached to your business.

[CATHIEA]

Having your property titled in an LLC is not just for "rich people" anymore nor is it just for tax perposes. Attorney's are now using LLC's for living trusts. This is something we're seeing more often. Because the owner of the LLC and the LLC are still one & the same you're ok to put the LLC on as an additional insured - otherwise you have to write this as a commercial policy - because in these cases the LLC also owns the contents.

[TheInsKid]

We use this endorsement for our high net worth families or others who use LLC's, works well and our companies understand the why's and how's.


SAMPLE
This Endorsement Changes the Policy. Please Read It Carefully.
Residence Held In Trust Or By Legal Entity
(Trustee as Named Insured)
Named Insured:
Policy Number:
Name of Each Resident:
Name(s)
For an additional premium, you and we agree the policy is amended as follows:
The definition of you and your is deleted and replaced by the following:
You and your mean the Named Insured shown in this endorsement and on the Declarations.
The definition of insured is deleted and replaced by:
Insured means:
a. you and residents named in this endorsement along with members of their household who are:
(1) Their spouse;
(2) Their relatives;
(3) Their domestic partner; a domestic partner is defined as an individual who:
(a) is financially interdependent with one of the residents named in this endorsement and shares
joint responsibility with that resident for each other’s common welfare;
(b) intends to remain in a committed relationship;
(c) shares the same living quarter and permanent address;
(d) is not so closely related by blood that legal marriage would otherwise be prohibited;
(e) is at least age 18 and like that resident, not legally married to another person;
(f) has not been in a different domestic partner relationship within the last 12 months; and
(g) is in the current domestic partner relationship which has been in effect for at least 12 months;
or
(4) Any person under the age of 25 in the care of a person described above.
b. If the spouse or domestic partner stops being a resident of the household during the policy period or prior
to the inception of this policy, they will be considered an insured under this policy until the earlier of:


(1) the end of 90 days following their change of residency;
(2) the effective date of another policy listing him/her as a Named Insured; or
(3) the end of the policy period.
c. Under LIABILITY AND MEDICAL PAYMENTSTO OTHERCOVERAGES, insured also means:
(1) with respect to animals or watercraft to which this policy applies, any person or organization legally
responsible for these animals or watercraft which are owned by you or any person included in a.(1),
a.(2), a.(3) or a.(4) above. A person or organization using or having custody of these animals or
watercraft in the course of any business or without consent of the owner is not an insured;
(2) with respect to any vehicle to which this policy applies:
(i) persons while engaged in your employment or that of any person included in a.(1), a.(2), a.(3)
or a.(4) above.
(ii) other people using a vehicle or watercraft covered by this policy with an insured’s consent.
Items b. and c. in the Definition of Insured Location are deleted and replaced by the following:
b. other premises, structures and grounds used by you or a resident named on this endorsement as a residence;
c. a premises used by you or a resident named on this endorsement in connection with a residence identified
in a. and b. above;
The following is added to coverage provided under Coverage For Liability And Medical Payments To Others:
Coverage provided for you under Personal Liability and Medical Payments To Others apply only with respect
to bodily injury, property damage, or personal injury arising out of the ownership, maintenance or use of an
Insured Location owned by the entity identified under the Named Insured.
All other provisions of this policy apply.

Includes copyrighted material of Insurance Services Office, Inc., 2001, with its permission.

[kevinraz]

Hey inskid:

Cool! Thanks for posting this. I hope more companies are willing to use it, seems like it fits the bill pretty well.

[InsNJ17]

[b]InsKid what form # is this- I see it's an ISO form[/b]

[TheInsKid]

It is not an ISO form however some of the language came from ISO Homeowners form (s)!
This endorsement or ones just like it are being used by at least 9 carriers that I know about, especially
the carriers who have high net worth personal lines books!!