I have been looking for the answer to that question also.
Gaylord & Associates (R/E people, not lawyers)of Des Plaines Illinois gave me the same answer as your lawyer gave you. Funny, their company was reorganized as an LLC about 6 months before they told me to rely on liability insurance alone.
I just found this yesterday. http://www.wdfi.org/_resources/indexed/site/newsroom/vcsummit/2001_archive/primerselbusent.pdf
In chapter 2 paragraph 1 the author says:" There is no shield from liability other than insurance coverage WHICH USUALLY DOES NOT COVER DEBTS AND FINANCIAL OBLIGATIONS".
Another ‘discovery’ I made in that document is that the LLC needs to be written to get the contents of the LLC to your heirs in the event of incapacitation or death. After reading that, I think I will stay away from the ‘opportunity’ to go online and generate my own LLC (at the Wisconsin.gov site)for $130.
LLC or Liability Insurance? - Posted by Tony S. in FL
Posted by Tony S. in FL on June 30, 2003 at 15:45:54:
I asked an attorney friend about holding my rentals in a LLC. He said why bother?
He said for the cost of setting a LLC up and maintaining it each year, you could get liability insurance that would cover just about anything he’s ever seen come across his desk.
Re: LLC or Liability Insurance? - Posted by JHyre in Ohio
Posted by JHyre in Ohio on July 02, 2003 at 18:44:26:
Insurance has its literal limits, not to mention exclusions (e.g. - lead paint, mold). The LLC is additional protection against a catastrophic but admittedly low-probability event (i.e. - getting sued, losing for BIG money and insurance doesn’t cover). You always weigh the costs vs. the benefits. In most states, LLCs are cheap. In high-cost states (e.g. - CA), you avoid overly complicated multiple-entity structures unless truly justified by the extra protection or tax benefits.