Hi guys,

I'm not sure whether I've been doing things wrong. I have a commercial multifamily 5+ unit building that is titled under an LLC. This LLC only holds title. No bank account. No tax returns. No EIN. All taxes are done through my schedule E tax return. The mortgage is under my name. For a long time, the insurance policy only has the LLC name as the insured. I operate this LLC and the rental business myself. Hence I think my personal name should be added as another insured on the policy. So I would be covered if a tenant falls and sues me. The insurance agent tried to convince me that nobody does that on business policy. He told me that putting my name as another insured would expose me to the risk of lawsuit. Instead of only suing the LLC, the lawyer would sue everyone under the policy. Hmm... but I'm already operating this rental business and I believe that I would get sued no matter if my name appears as the insured. I'm confused.

Ahhhhhh what are you trying to do with how your business is structured?

Since I know nothing to answer your question, thought AI could help. As follows:

The safest approach is to list your LLC as the Named Insured and add yourself as an Additional Insured. This separates your personal liability from the business while ensuring you are individually covered if a lawsuit targets both you and the LLC.

Here is how to set up your multi-unit property insurance:

1. The Named Insured: Your LLC

The property belongs to your LLC. Therefore, the LLC must be the primary "Named Insured" on the policy. This proves the LLC owns the property and ensures business assets are protected if a tenant or visitor gets hurt and sues the property owner.

2. The Additional Insured: You

You should be listed as an "Additional Insured" on the policy. In a lawsuit, lawyers often sue both the LLC and the property owners personally. Adding yourself ensures your insurance company is legally obligated to defend both you and the LLC in court.

3. The Right Type of Policy

Because a multi-unit property is a business asset, personal homeowners insurance usually will not work. You should purchase a commercial policy called a Lessor's Risk Only (LRO) policy or a Business Owner's Policy (BOP).

Real-World Example

Imagine a tenant slips on an icy stairwell. They sue both your LLC and you as the owner.

If only the LLC is on the policy: The insurance company might only defend the LLC, leaving you to pay out of pocket to hire your own personal lawyer.

If you are listed as an Additional Insured: The insurance company steps in to pay for your legal defense and any damages, protecting both you and your LLC.

Always consult with an insurance agent who specializes in commercial real estate to ensure your Business Owner Policy is written correctly for your exact business and property.

In talking to my agent about icy slip and falls I got very different responses.

We do not have to clear the drives or sidewalks in my area for tenants.

He said that if I do nothing they can not sue me for doing it wrong. My lease says that I do nothing with regards to clearing walks or drives.

When I walk people thru the lease I explain it as such:

I do not clear the walks or drives. If I did and you slipped and fell you could sue me. Since I do not if you slip and fall you have to sue Mother Nature, and she has better lawyers than I do.

This usually gets a giggle from the new tenant.

I disagree with your insurance agent that they could not sue you. Anyone can sue anyone for anything. Even if you're 100% innocent, legal fees to prove it can eat you alive.

I agree with anyone can sue for anything.

He was talking more about a legitimate suit.