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Liability coverage challenge
Old 11-18-2014, 04:52 PM   #1
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Liability coverage challenge

DW and I are seriously considering putting a bid on a mountain cabin that needs some work, but has a gorgeous piece of land and lots of potential. The challenge is insurance coverage. In its location and condition, it is difficult, but not impossible, to find property coverage. The rub is that the insurer (Lloyd's) did not include liability coverage in the policy, which we must have in order to be covered by our umbrella policy. The agent is looking into whether that policy can have liability coverage added to it. If not, I will dig around for other options, but unless I can get coverage I am not even interested in a bid for a penny. Anyone run into this before? Are there other options that might work?
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Old 11-18-2014, 05:17 PM   #2
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I've had the same issue on a remote cabin.
Try insuring it for a set minimal amount, far below replacement coverage. It will be expensive, but you are really buying the liability insurance.
I've even been tempted to change the ownership to an LLC, and have the LLC own the property. That way if the owner is sued (LLC) you have a layer of protection.
Just be sure to follow the proper separation of LLC and yourself (separate bank accounts, document the loans you make to the LLC to pay for repairs/taxes/etc).
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Old 11-18-2014, 05:24 PM   #3
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I've even been tempted to change the ownership to an LLC, and have the LLC own the property. That way if the owner is sued (LLC) you have a layer of protection.
Just be sure to follow the proper separation of LLC and yourself (separate bank accounts, document the loans you make to the LLC to pay for repairs/taxes/etc).
Be careful on this. To the extent that you are yourself negligent (or can be alleged to be so), the LLC shield probably does no good. For example, if a guest steps through a rotted floor board and breaks fall on the loaded shotgun behind the door, you likely will still be personally liable if you put the loaded gun there and/or knew about the floorboard being bad. And guaranteed that if an injury occurs, once the LLC ownership is found, there will be allegations of personal negligence.
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Old 11-18-2014, 05:44 PM   #4
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Potential liability makes me never want to own property again. Always someone wanting to sue or dump stuff on your property, trespass, etc.

Believe it or not, we had squatters (or kids?) who built a fire in our gazebo by the river (we rarely go down there). Not only did they leave garbage behind (several half eaten jiffy pop tins) but they left a huge stack of split firewood like they planned on coming back several times. Imagine if they had gotten burned, we would likely be responsible even though they were trespassing.
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Old 11-18-2014, 06:42 PM   #5
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If you own a home and have homeowner's insurance, many carriers will allow you to endorse the liability coverage for a secondary home for $20 or so.
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Old 11-18-2014, 07:03 PM   #6
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Once upon a time when I lived in an apartment I bought pure liability insurance this was in 1976 and cost about $50 a year. If you own a home you might check as noted if the carrier will extend liability insurance to it.
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Old 11-18-2014, 08:01 PM   #7
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If you own a home and have homeowner's insurance, many carriers will allow you to endorse the liability coverage for a secondary home for $20 or so.
A very good thought. I will call my main carrier tomorrow and ask about that.
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Old 11-19-2014, 06:57 AM   #8
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We had a similar issue when we bough some land (94 acres). As long as it was raw dirt, it was covered under our current home owner's insurance. Once we started to build on it, it was not.

Is the cabin in the same state that you live?

Our situation was we had our primary residence in IN and the dirt was in TN. We also bough a secondary house in TN so we had a place to stay when we went there.

Our current (at the time) insurance (USAA) wouldn't insure the dirt (farm) after we started building on it. I came close with Farm Bureau (and a couple other places) but they had an issue because our primary residence was in another state. USAA had referred me to Travelers Business and at first they wouldn't write the policy because just the farm (without house) wasn't a big enough policy for them - but after going back and forth several times they were able to bundle our TN house with thee TN farm together so that it was big enough for them to write the policy. To be able to do that I think they had to be able to write policies in both IN and TN.

When we sold the IN house and moved to TN, I had too many different insurance companies - USAA had auto and umbrella, Travelers had TN house and farm, Progressive had boat and yet another company had a builder's risk policy for the house we were building. This made keeping the umbrella policy happy difficult. So since we were 100% in TN now I was able to go to Farm Bureau (who is used to doing farms) and do everything with them.

Good luck. But bottom line is if the cabin is in the same state as your main residence, it might be easier to get an insurance company to insure them both.
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Old 11-19-2014, 11:37 AM   #9
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A very good thought. I will call my main carrier tomorrow and ask about that.
I have owned (and still do) a number of properties over the years and, like you, I would never considered any of them without liability insurance.
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Old 11-19-2014, 12:45 PM   #10
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+1 on adding coverage for second home liab to your primary homeowner policy
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