As a “land business” with a number of properties owned by our LLC in inventory, we are concerned about the best type of insurance policy for our business model. All of our properties are rural vacant land without any structures, but several are currently being financed by term buyers who, by agreeing to the finance terms, are required to have their own insurance policy coverage for the property. With properties being added and removed from inventory as they are acquired and sold, what is the best insurance policy type to provide the necessary coverage while remaining cost-effective?
@chris-m The only outfit I know that makes this somewhat easy for land flippers, allowing you to add or remove coverage from properties on a month-by-month basis, is NREIG (that’s an REtipster affiliate link, btw).
Plenty of other insurance agencies can sell you the same kind of insurance, but I haven’t found another one that allows easy month-by-month changes.
When I’ve bought policies through other companies, it’s more expensive and I have to pay for a full year at a time, which is a hassle when your inventory is constantly turning over.
Here’s a video explaining how it works.
Also, are you owner financing these with a land contract, a mortgage, or a deed of trust? If you’re using a land contract, that’s when insurance would be a real concern because the property is still in your name.
If you’re using a mortgage or deed of trust, the liability would be on your buyer, because the deed is in their name during the term of the loan
@chris-m You may want to consider an umbrella policy. It provides an additional level of liability coverage, and does not change every time you buy a new property.
@tmiski I thought only individuals could have an umbrella policy, not companies or corporations. Can you please help me understand your angle?
Thank you!
Paul
@paulb Your corporation is your first layer of defense. If a plaintiff is able to pierce that and come after you personally then the umbrella policy would be there to protect your personal assets.