As a homeowner you need to be prepared for accidents to happen. Whether severe weather conditions, fire, or lightning causes damages to your property, you need to know the right type of insurance protection is in place. However, what if there are other ways you could further enhance your property and home beyond your typical homeowners insurance? You may want to consider whether an LLC (Limited Liability Company) would be a viable option for your named home.
LLC and Protection for Personal Assets
Limited liability protection is the essence of an LLC. Homeowners’ personal assets can be protected from claims/judgements, and lawsuits brought against them when an owner uses an LLC for his/her home. So, if the financial liability is limited only to the value of the home, then personal assets (such as retirement and savings) would be protected. Limiting your personal liability for those unexpected situations is essential when you are factoring in personal assets.
Other Key Characteristics of an LLC-Named Home
There are numerous features of an LLC-Named home you should consider when deciding whether your specific needs warrant the need of an LLC, other than avoiding personal liability as previously noted.
Self-Employment Tax- People owning rental properties, vacation or secondary homes may consider using an LLC but it can lead to a chance of a mandatory self-employment tax, which could be considered a drawback.
Efficacy- Having your named-home under an LLC can end up being more efficient when settling your estate versus a probate court settlement.
Pass-Through Taxation- Any revenue earned by the LLC is ONLY taxed once at the individual level versus a business level. If you are the sole owner of the LLC, this pass-through taxation is a bonus.
Is Your Home Adequately Protected?
It may or may not be your best option for an LLC-named home, but it can have benefits that you may want to consider. An LLC is typically considered a “business entity” which does put you at risk for being excluded for personal insurance. Keep in mind that this exclusion can be added back under an endorsement. The insurance industry does recognize the need for LLC coverage for your home. This add-on endorsement can be added to your New York homeowners or personal umbrella policy to provide coverage to “other structures” on your property along with your home.
Contact Cameron Group Insurance Today!
If you have any concerns or questions regarding LLC home protection, call us today at 845-627-2130. We can assess all your homeowners needs and offer unique solutions at a price you can afford. We are here for all your New York homeowners insurance needs.