Additional Interested Party?

[insurance1822]

Hello All,

I've never really fully understood the coverage specifics when it comes to addiitional interested parties...If I have a husband & wife who own rental properties in the name of the LP, If I write the insurance in their personal names with their LP as an additional interested party...willl it give them the protection they need?

I have carriers that will write the policy this way (i.e they won't put the policy in the name of the partnership but will list it as an additional interested party)

How would coverage play out in the event of a property or liability claim against the partnership?

 

[Scottyj]

Safeco does this as well. When this happens the LP, LLC, or Trust are generally covered as additional interests under coverage sections I and II. This means that essentially they are covered on the crucial points of the policy such as Liability, and the structure.... as for contents and and other endorsements... they are usually not covered.

 

[insurance1822]

So would you write the business with safeco like this?

aka the properties are in the name of the LP..would you write the policies in the name of the individuals with the LP as an additional interested party to fit into safecos guidelines? would that be doing the insured any injustice?

 

[Scottyj]

I actually did this recently becasue the Insured asked for this as apposed to a commercial property being he wanted his primary residence and seasonal residnece on the same accound with his 7 other rental homes. Normally I would do this on the commercial side being the wording on a commercial policy is built to protect both the llc and its officers... but in certain cases out of convenience if the client understands the differences and is ok with them, then I believe it is fine.

In many cases say with rental properties the main importance is to protect the llc and its officers via liability as well as the llc's investment which is the property in question. I would only recomend going the personal lines route if its requested and if the LLC is 100% owned by the named insured(in other words 1 person)... if you have mulitple partners... a commercial policy is best.
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In all honesty after reading your question again I realized this is a limited partnership we are talking about... refering to my above statement if not owned 100% by llc in which the llc is owned by 1 person, then go with a commercial policy.

Safeco will more than likely in your case name one person as a named insured and the second insured and LP as additional interests which may not be the best. GO Commercial.

 

[Guest]

In commercial lines there is a difference between a additional interested party and the owner of the property.

• The owner of the property is the named insured and the definition of the named insured, for a limited partnership, avoids the necessity to state the names of the partners.
• A additional interested party has a insurable interest, in lieu of, a ownership interest. Coverage for an additional interested party is added by endorsement. A lender is added to the property coverage with a lender's loss payable endorsement. A lessor, in a lease of office space, is added to the liability coverage with a additional insured endorsement.

Apparently, for a limited partnership to be underwritten as a personal lines risk there is no difference between a additional interested party and the named insured. If a limited partnership is what may be considered as a "gray area" in personal lines it is "straight forward" in commercial lines. Also, if another personal lines policy that provides umbrella or excess is involved it is best to avoid any "gray areas".