Transferring a home — or a rental property — into a limited liability company is a common asset-protection strategy. The goal is to shield the property (and your other assets) from personal liability: if someone is injured on the property and sues, the claim is generally limited to what’s inside the LLC, not your personal savings. But the transfer changes more than the title — it changes how the property is insured.
The insurance gap
A standard homeowners policy names you as the insured — a natural person who owns and occupies the home. Once an LLC owns the property, the LLC becomes the legal owner. If the policy still names only you, there’s a mismatch between who owns the property and who the policy covers. That’s not a paperwork technicality: after a fire, storm, or liability claim, the insurer can deny coverage because the named insured no longer matches the owner — or allege the application was misleading.
What your policy becomes
What you need depends on one question: are you still living there?
- You still live in the home. Most carriers won’t write a standard homeowners policy on an LLC-owned, owner-occupied property. You’ll typically move to a dwelling fire policy (DP-3) in the LLC’s name, or keep the homeowners policy with the LLC added as an additional insured through a trust/LLC endorsement.
- The property becomes a rental. You’ll need a landlord/dwelling policy in the LLC’s name — and if you’ve moved out, your own belongings are no longer covered, so you’ll want separate coverage too.
Title insurance — the other policy to check
When you deed your home to an LLC, your existing owner’s title insurance policy doesn’t automatically follow the property. That policy was issued in your name, and the LLC is a brand-new legal owner — a standard owner’s policy generally doesn’t extend to a newly formed LLC on its own. That means the LLC could be taking title subject to old defects, liens, or encumbrances, with no coverage.
The fix is to obtain a new owner’s title policy in the LLC’s name at the time of the transfer. The good news: if your existing policy is relatively recent, most title companies will issue the new policy at a discounted reissue rate, so the cost is modest. The title company will also verify the LLC is properly formed and in good standing before underwriting the new policy.
And if there’s a mortgage on the property, transferring to an LLC can trigger the due-on-sale clause — so your lender should be in the loop before you sign.
Liability — the part people miss
The liability coverage has to extend to the LLC and its members, and your personal umbrella policy should be reviewed at the same time. Otherwise you get a gap: the property policy covers the LLC but not you personally, or vice versa — exactly when you need both.
The Florida homestead wrinkle
In Florida, transferring your homestead to an LLC carries an extra risk: it can jeopardize your homestead exemption and the constitutional creditor protection Florida homestead enjoys. This is a transfer you should never make on a whim — the insurance and homestead consequences have to be weighed together.
Do it in the right order
- Talk to your estate planning attorney first.
- Loop in your insurance agent before the deed is recorded.
- Get the LLC listed as named (or additional) insured.
- Order a new owner’s title policy in the LLC’s name.
- Notify your lender if there’s a mortgage.
- Confirm the correct occupancy classification.
- Review your umbrella policy.
Done right, an LLC is a powerful layer of protection. Done wrong, it leaves you paying premiums on a policy that won’t pay out when you need it.
Need help with the transfer? The Brammer Firm helps Florida families structure their property the right way — coordinating the legal and insurance steps so nothing slips through. Schedule a free consultation.