Mar 8

Ensuring Insurance Coverage for Trust-Owned Properties

Hurricane photo

According to an article in The Ledger – Will 2020 Give Florida a Break In Hurricane Season? , there is only a 10% chance that we’ll see a less than normally active season in 2020.

Fellow attorneys have reported cases where insurance carriers refuse to honor a claim when the homeowner’s insurance policy does not name the homeowner’s trust as an additional or named insured. In other cases, the insurance company has dropped the policy when the homeowner dies. What’s the solution? Ask your insurance agent 2 important questions:

  • Is my trust listed as an “additional insured” or “named insured”?
  • Will coverage continue in the event of my death, or if no one is living in my home?

The concept of an additional insured is used to protect third parties, such as banks who loan money in exchange for a mortgage. They want to be sure that the mortgage is paid before money goes into the pocket of the homeowner. It’s not unreasonable for you to expect continued coverage for the successor trustee of your revocable trust if they hold title to your home.

In 2017, Citizens Property Insurance Corporation announced its plans to cover property held in trust. The following guidelines were posted on its web site:

Residence Held in Trust

Under the new rules:

  • A homeowner, dwelling or a condominium unit policy can be issued when legal title to the residence is held in trust.
  • Eligible policy types can be endorsed to insure a trustee and, if applicable, a trust.
  • The trust, by itself, cannot be the named insured. The name(s) of the trustee(s) must precede the name of the trust as the named insured.
  • Trustees that are corporations, partnerships or limited liability companies (LLCs) may be eligible for dwelling policies without liability coverage.

Finally, if you agent says your trust can’t be added as a named insured or an additional insured, ask your agent to help you find a company that will protect you and the beneficiaries of your trust.