Tag Archives: Business Property Insurance

LLC vs. Individual – Rental Property Owner

 LLC vs. Individual – Rental Property Ownermeter

Should you form an LLC if you own rental property? The decision to form an LLC is complicated and each landlord’s situation is different. The first LLC came into existence in the U.S. in 1977 in Wyoming, since then all 50 states have enacted LLC legislation.  Here are some pros and cons to  help you decide if an LLC is right for you.

PROS

  • Protect your personal assets from lawsuits: If someone sues you when set up as an LLC, your personal assets are protected. Only the LLC’s assets are at risk.
  • Pass-through taxation: Pass-through taxation is an IRS related ruling allowing LLC profits to be passed directly to the owner. Taxes are paid on by the individual, avoiding double taxation.
  • Easier management responsibilities: LLCs are much more easily managed than corporation or partnerships and many states offer reduced fees.

CONS

      • It costs money to set up an LLC: You can set up an LLC with the State Corporation Commission and pay a small fee. Many people choose to use an attorney or hire a services company. These options cost from a few hundred to a few thousand dollars.
        • Keep your money separate: It is important that you never mingle your LLC money with your personal money. The slightest infraction could cause a litigant to claim the LLC is not a separate entity, causing you to lose any LLC protection.
  • Mortgages can complicate: If you already have a rental dwelling with a mortgage on it, changing to an LLC could look like a sale to your mortgage company. If you have a due-on-sale clause in your mortgage it may cause the mortgage company to require payment in full.

 

The decision to form an LLC is complicated and each landlord’s situation is different. Consider the above information and consult with your CPA or attorney to see if an LLC benefits you. Then let the experts at Cobb-Hall provide insurance solutions designed specifically for your needs.

Equipment Breakdown

EquipmenIndustrial icont Breakdown

Whatever your business; from a freelance graphic designer with a computer set up worth thousands of dollars, to a manufacturer with millions of dollars worth of equipment, if your equipment breaks down your business may too.  When your computers, machines and other equipment work properly, your business runs smoothly. But when a vital piece of equipment breaks down, you’re stuck while the equipment or wiring is repaired or replaced. During that time, you may have to pay for servicing and lose revenue while your business cannot operate. The costs can be huge. Equipment Breakdown Insurance is a necessity in this technological age. You can cover your equipment repair costs and reimburse yourself for lost income. Coverage typically covers a number of equipment related issues. Some examples are:

  • Payment to fix or replace failed equipment
  • Reimbursement for labor and time costs to fix or replace failed equipment
  • Replace lost business income due to equipment failure that leads to business stoppage
  • Cover costs to minimize losses or to get equipment working and productive faster
  • Reimburse for loss of materials or goods, such as spoiled food due to equipment shut down

Equipment Breakdown Coverage includes many options. Let the experienced professionals at Cobb-Hall Insurance provide solutions designed specifically for your needs.

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Explaining Insurance to Value

Correct Insurance Valuation Prevents Claim Payment Penalties

Commercial Insurance is designed to protect your business from financial disaster.  Insuring your Value Price scale 3d word concept over whiteproperty with correct valuations is critical.

Two basic types of coverage on commercial policies are: 

Real property which includes the land, buildings, and permanently attached or installed machinery, equipment and outdoors fixtures.

Business Personal Property is a term used to describe property that can be easily moved, such office equipment and furniture.

Valuation of your property is determined by two different ways:

Replacement Cost as it sounds, is the amount needed to replace damaged or destroyed property. It is important to remember that replacement value is NOT the same as market value. The cost to restore your property to its condition prior to the loss is almost never the same as its purchase or sales price. Most commercial insurance policies protect commercial buildings for replacement cost. The valuation of the building is generally the amount needed to restore you property to its pre-loss status.

Actual Cash Value limits insurance loss payments to the amount your used item was worth if you were to sell it. Coverage on an ACV basis costs less because in the event of a claim, the cost to purchase all new furniture and office equipment is considerably more that the depreciated value of your old equipment.

Business Personal Property can be insured on a replacement OR Actual Cash Value basis, depending on your choice. It is important to note that the difference between replacement cost and actual cash value can present a huge financial difference in the event of a loss and need.

While many times, the valuation of the building is determined by size and construction material, there are additional choices concerning types of coverage and deductibles.

Let the experienced professionals at Cobb-Hall eliminate confusion and provide solutions designed specifically for your needs.