How do you insure a California home owned by an LLC?

The LLC's name does, because the LLC owns the home. California law says "A limited liability company is an entity distinct from its members" (Corporations Code section 17701.04). So once the deed names the LLC, the LLC is the owner, not you.

Insurance needs a stake in the home, called an insurable interest: damage to the home could cost you money. Insurance Code section 280 says "If the insured has no insurable interest, the contract is void."

The stake has to be there at two moments. Section 286 says it "must exist when the insurance takes effect, and when the loss occurs."

So the policy should name the owner on the deed, and you too if you live in the home. The names are on your policy's first page. The same goes for a home held in a living trust.

Fix this gap first. Insurance Code section 305 says a transfer of the home "does not transfer the insurance," and suspends it until one owner holds both. In plain words, the deed and the policy need the same owner.

Whether a claim would be paid while the names don't match depends on your policy and the facts. Don't find out after a fire.

You can't simply hand the policy to the LLC, either. California's standard fire policy says assignment "shall not be valid except with the written consent of this company." Your insurer has to make the change.

So tell your insurer or agent about the deed now, and ask in writing how the LLC will be named. After a loss, California's standard fire policy has you list "any changes in the title" since the policy was issued. Keep the current policy active until the change is confirmed, because a gap in coverage can narrow your choices later.

Some insurers will, says an April 2021 article on IRMI, an insurance reference site. But it says many won't offer one with liability coverage when an LLC owns the home. If your insurer won't name the LLC, shop for one that will rather than leave the LLC off.

A homeowners policy is built around people. The California Department of Insurance says its belongings coverage protects things "owned by you and other family members who live with you."

An LLC has no family and lives nowhere. As the IRMI article puts it, an entity such as an LLC is a "what," so a homeowners policy without add-ons can't cover it as "you."

If you or another member lives there, ask for both on the policy: the person who lives there, and the LLC as owner. The article warns that naming only the LLC leaves the people living there without coverage for liability claims, their belongings, or living costs after a loss.

If the LLC rents the home out, ask for a landlord policy, such as a dwelling fire policy, in the LLC's name. Renting out a home changes which policy fits, and so do short stays, so tell the insurer how the LLC rents it.

A landlord policy won't cover your tenants' things. The Department tells renters, "Your landlord does not provide insurance for your personal property."

Liability coverage protects the people a policy defines as insured, and an LLC isn't one of them unless the policy names it. If a guest, tenant or worker is hurt and sues, the LLC can be named in the lawsuit, because it owns the home.

The IRMI article describes a family whose LLCs were left off its policies. After a worker was killed on the property, the homeowners policy protected the family, but not the LLC, so the family paid lawyers to defend it.

Ask that the policy's liability coverage name the LLC. If you carry an umbrella policy, the extra liability coverage above your home and car policies, ask about it too. The article notes that personal umbrella policies "cover individuals, not entities."

Yes, if the home has a mortgage. Your lender is named on the policy in the mortgagee clause, and a house claim is paid to the lender and to whoever the policy names. The FAIR Plan's dwelling policy, for example, pays "to the mortgagee and you, as interests appear."

Lenders also check whose names are on the policy. Fannie Mae's rules for the loans it buys say the policy "must name all persons holding title to the subject property as named insured."

If the home has a loan, talk with your lender before the deed changes, and send it the updated policy. Questions about the transfer itself belong with your lender or an attorney, not your insurer.

Use the LLC's name exactly as the state has it. You can look it up on bizfile Online, the California Secretary of State's business portal. By law, the name includes "LLC" or "limited liability company" in some form.

Casa's questionnaire asks this too: who owns the home and, for a company, its legal name as registered with the state.

Whoever you ask, have these details ready, and get every answer in writing.

• The LLC's exact legal name, and the date the deed moved to it.
• The members' names, and whether any member or relative lives in the home.
• Who else lives there: tenants on a lease, short-stay guests, or nobody right now.
• Your lender's name and loan number, so its line on the policy stays right.
• Any umbrella policy you carry, so it can be checked for the LLC too.
• Whether naming the LLC changes the price or the coverage.
• A request for written confirmation of every name on the policy.