Trusts and Homeowner's Insurance

*This post is for informational purposes only and is not to be constued as legal advice. Please consult your estate planning attorney for advice tailored to your specific circumstances and your insurance policy*

With the rise of natural disasters, it may be important to talk to your homeowner's insurance after setting up a revocable living trust. 

Why could this be important?
 

1. Coverage for the Trust-Owned Property

When you transfer your home into a revocable trust, the trust technically becomes the owner. If the trust isn't listed as an additional insured or named insured on your homeowner’s policy, there could be issues with coverage in case of a claim (e.g., fire, theft, or liability claims).

2. Avoids Potential Coverage Denial

Insurance companies may deny or limit coverage if the named insured (you as an individual) no longer legally owns the home. Adding the trust ensures that the insurance company recognizes the proper ownership and will cover losses accordingly.

3. Protects Against Liability Issues

Homeowner’s policies typically include liability coverage for injuries or damages occurring on the property. If the home is in a trust and the trust isn’t listed on the policy, there could be questions about whether the policy covers claims against the trust. Listing the trust ensures liability protection remains intact.

4. Facilitates Smooth Estate and Probate Planning

A revocable trust is often used to avoid probate, and ensuring the trust is correctly listed on the homeowner’s policy helps prevent legal or insurance issues for beneficiaries after the Trustor’s death.

5. Avoids Lender or Insurance Complications

If there’s a mortgage on the property, lenders may require the insurance policy to reflect the trust's ownership. Some insurers might also request specific endorsements to clarify the trust’s role in ownership.