Property Insurance for Real Property in Trust
By Joseph Ferrucci
September 16, 2015
When you obtain property insurance, you might think you are insuring the property itself. In fact, you are insuring yourself, the owner, against the loss you would experience if the property were damaged or destroyed, e.g., in a fire or flood. When you transfer your real property into your living trust (to avoid probate proceedings), there is a risk that your insurance carrier may not provide coverage, because the policy was obtained by the old owner (you), not the new owner (the trust).
Fortunately, there is a simple solution. Most insurance carriers will allow you to add your living trust as an “additional insured” on your existing property insurance policy at no extra charge. Contact your insurance agent or carrier and ask how you can add your living trust as an additional insured. You may have to fill out a form or provide a copy of your current property deed or your certification of trust.
When you add the name of your living trust to the policy, should you eliminate your name from the policy at the same time? Not at all. Usually, property insurance covers not only property damage, but also personal liability with respect to the property. For example, if your neighbor comes into your house, trips and falls, and gets injured, you could be liable. If your policy only has the name of your living trust, and you (not the trust) are liable for the injury, the policy may not provide coverage. Also, if your name is not on the policy, it may not cover the loss of your personal effects. In other words, if your living trust owns your home, and you own the furniture, electronic equipment, clothing, and jewelry that you keep in your home, the policy may not cover the damage or destruction of those items if the only named insured on the policy is the trust.
DISCLAIMER: This article contains general information about legal topics. It is not, and is not intended to be, legal advice. Your use of information in this article does not make Joseph Ferrucci, Attorney at Law P.C., or any of its attorneys, your attorney and does not establish an attorney-client relationship. Every case must be analyzed independently, based on the specific and unique facts of the case. If you have questions about your particular case, consult with a licensed, qualified attorney. This article is intended for personal use only, and not for publication or distribution.
© 2016 Joseph Ferrucci, Attorney at Law P.C.