Prospect with rental properties

[insurancequestion]

I have a prospect that has about 10 or so rental properties..his current agent has those properties broken up between Lititz Mutual, Safeco, Travelers, Nationwide and Auto Owners. They let me take a look at the dec pages..and I was curious as to why an agent would put him with so many different carriers as opposed to one carrier? Is there a benefit to have different carriers as opposed to one?
Also, would be be more advantageous for these prospect to have formed some sort of LLC versus having these policies listed under their names?
I know some admitted carriers have a limit to how many landlord policies one can have...I didn't know if one of those carriers are better than another.

 

[adjusterjack]

I was curious as to why an agent would put him with so many different carriers as opposed to one carrier?

The first reason that comes to mind is underwriting. The rentals may be of varying quality levels. Safeco, Travelers and Nationwide probably want squeaky clean, though Nationwide has its own E&S market for the not so squeaky clean. Auto Owners had my average quality rentals for 20 years but that was long ago. I don't know anything about Lititz Mutual.

Another issue could be rates based on when the properties were first purchased and then complacency set in, especially if there were mortgages involved and insurance was escrowed.

Is there a benefit to have different carriers as opposed to one?

Not really.

Also, would be be more advantageous for these prospect to have formed some sort of LLC versus having these policies listed under their names?

No. While LLCs are useful under some circumstances they don't protect anybody from personal lawsuits based on their own negligence. For anything else, with a one or two member LLC it would be easy to "pierce the corporate veil."

I know some admitted carriers have a limit to how many landlord policies one can have.

I can't imagine why anybody believes that. Insurance companies will take as many "good" risks as they can get.

.I didn't know if one of those carriers are better than another.

I don't know anything about Lititz Mutual. The other 4 are top tier.

Another thought occurred to me. His agent may have done it on purpose to make it more difficult for the competition to take the business away. Your prospect may be unwilling to move some properties now without knowing what the rest will cost later.

What you might consider is submitting them all to your commercial lines underwriter on one application and see if you can save the prospect enough money to make it worthwhile to cancel the policies that don't have a common X date.

 

[insurancequestion]

Thanks!

 

[fed up]

can't imagine why anybody believes that. Insurance companies will take as many "good" risks as they can get.

One major carrier takes landlord properties as a convenience for customers, only allows 4 per named insured. Figures that anything above 4 is a commercial exposure and doesnt like to write any commercial exposure which could have a claim in the future. But they want you to think they have you in the palm of their hands.

 

[Markthebroker]

They let me take a look at the dec pages..and I was curious as to why an agent would put him with so many different carriers as opposed to one carrier

Many reasons. The named insureds could be different. Pricing reasons, underwriting reasons. Agent incompetence or apathy. Many possible reasons.

Also, would be be more advantageous for these prospect to have formed some sort of LLC versus having these policies listed under their names?

That's a great question for an estate planner or attorney. But of course you won't discuss it with the client as I assume it's excluded from your license and e&o.

I know some admitted carriers have a limit to how many landlord policies one can have

Rarely is that the case with commercial policies. I write blanket policies all the time. I just sent a quote with 6 houses on it.

 

[adjusterjack]

Back in my heyday I had a client that averaged 400 properties on one policy. Dwellings, apartments and condos, oh my. He was constantly buying and selling, hundreds of named insureds, additional insureds, mortgages. Everything was on paper back then. (Yes, I'm that old.) No computers, no scanners. It was practically a full time job for the CSR. Fortunately, it generated a lot of income.