07/25/2019 by heiseheisellp 2 Comments
Why a Baltimore Real Estate Investor Should Consider an Umbrella Insurance Policy
If you are an owner of investment real estate in Baltimore, MD you are at an above average chance of being sued. Why? You are likely not living on site, and as a result, certain condition issues may not be brought to your attention promptly. Additionally, you have only so much control over your tenants, who they invite into their home and the activities they engage in.
Sure, you have insurance and that will cover your liability but only to the extent of the coverage limit of your policy. For example, let’s say that a tenant sues you for an injury he sustains and you only have coverage in the amount of $500,000.00. If the tenant gets a judgment for $750,000.00 your policy will pay out $500,000.00 but the remainder of the judgment, $250,000.00, is yours to deal with alone. If you cannot pay the remainder of the judgment your property, and possibly your personal assets, are at risk.
How do you protect against suffering this loss? You may want to consider an umbrella insurance policy. An umbrella policy sits on top of your insurance policy and typically covers the same things as your existing policy. However, the umbrella policy kicks in where the limits of the existing policy are reached. An umbrella policy usually runs $150.00 – $300.00 per year for $1,000,000.00 of coverage oftentimes making it less expensive than increasing your underlying policy limits.
Most insurers that issue umbrella policies in Baltimore will only sell you a policy if you place your property and general liability policy with them and maintain certain amounts of liability coverage. This is a good practice because with just one insurer, if the requirements of the umbrella policy change you will be given notice. Also, if the underlying policy limits are exceeded you will be able to keep the same insurance agency attorney on the job throughout your case.
Have questions about investing in Baltimore real estate? Give us a call.