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Umbrella Policies; The Good, The Bad and The Ugly

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Let’s make sure you’re educated on exactly how Umbrella Insurance works.  After all, your family and loved ones are relying on you to make wise decisions.

May 23, 2024
Author: Adam Kintigh

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For the past two years, we’ve had people inquire about forming LLC’s to protect their assets.  It never fails, people start chiming in, “Get an UMBRELLA POLICY!”   

Let’s make sure you’re educated on exactly how Umbrella Insurance works.  After all, your family and loved ones are relying on you to make wise decisions.

How many properties should I have before getting an LLC? Let’s start with the main question: I have insurance on my property, and I have an UMBRELLA POLICY. Do I really need an LLC?

Always keep a good insurance policy. Insurance is a hedge against loss. We buy insurance to spread the risk among many. In the event of an accident, we’re hoping to pay out as little as possible. Insurance companies have adjustors and attorneys who’s job is to pay out as little as possible on claims. You are competing with your insurance company to pay out as little as possible. Who do you think is going to win every time? You can’t blame them – if the insurance company paid out on every claim that came through, the insurance company would quickly go bankrupt. So we think to ourselves, “I’ll get an umbrella policy, that will cover everything!”

Keep in mind, you can get a $1,000,000 Umbrella Policy for $200-$300 per YEAR. Why is this Umbrella Policy so cheap? The umbrella policy only kicks in IF the underlying policy exhausts its policy limits. The odds of an Umbrella Policy ever paying out is extremely low – almost zero!

I do carry an umbrella policy, for one reason: car accidents. The only insurance that might max out on policy limits, in my view, is my auto insurance. I have 6 boys, and they drive my vehicles. Most likely if there’s an accident, the medical insurance could quickly max out. The umbrella gives me peace of mind, kinda…

The Limited Liability Company (LLC) is truly the best way to protect your assets. If your name is on title of any property, as innocent as you may be, you are responsible. By transferring rental properties into an LLC, you are moving the liability from you to a legal entity. You own the LLC, you control the LLC, but legally, you are NOT the LLC. A properly formed LLC will give you the very best protection against accidents.


Start your Nevada LLC in
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You don’t need to live in Nevada to enjoy the best asset protection
and audit defense a Nevada LLC can provide.

Remember, different states have established different laws. You may have heard Delaware, Nevada, and Wyoming are the best states. This is completely true! Regardless of where you live, and regardless of where your properties are located, you can legally organize your LLC under the laws of states like Nevada and Wyoming to provide you with the very best protection.

Bottom line: keep good insurance AND use LLC’s. We live in a world that’s gotten so far away from suing someone that’s done something wrong, to just trying to tie in the deep pockets. In the event of an accident, the attorney’s job is to go after everything you own, including future wages. Wyoming LLC’s are the perfect tool to protect you, your family, and your assets. So even if you only own one investment property, you would be wise to go ahead and form the LLC.


With NCH, the state’s top business formation service, you can register your LLC in Nevada quickly and easily. Our specialists will help you choose the right entity for your company and understand why an LLC in Nevada is your best option. We’ll assist you with all necessary Nevada LLC forms, including the vital Articles of Organization, and help you comply with state regulations. In addition, we offer expert assistance with tax compliance, credit building, and payroll management. Schedule a private consultation to explore effective solutions to minimize tax liabilities and protect your wealth. Start unleashing your LLC’s full potential today with NCH. Schedule a consultation with (CAD Name Here) today!

DISCLAIMER: The above material has been prepared for informational purposes only, containing opinions of the provider, and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. Please consider consulting tax, legal, and accounting advisors before engaging in any transaction.


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