Do You Need to Own a Policy in the Name of Your Trust or Add the Trust as an Additional Insured?

If you’ve placed your home in a trust, it’s critical to understand how to align your homeowners' insurance with that ownership—not just for legal purposes, but also to protect your most valuable asset.

A simple oversight, like failing to update your policy, can lead to denied claims when you need coverage the most. 

In California, where wildfires, earthquakes, and other natural disasters pose significant risks, insurers have increased scrutiny by insurance carriers, leaving homeowners more vulnerable than ever. 

Any misaligned insurance policies can jeopardize your financial security and the protection of your property. 

Let’s take a closer look at options for insuring your properties.

Some Options for Insuring Trust-Owned Properties

Under California law, a trust is considered a separate legal entity. 

If your property is owned by a trust but the trust is not listed on the insurance policy, insurers may deny claims, arguing that the trust has no insurable interest under the terms of the policy. 

Here are two common approaches to help safeguard your property to reflect on the insurance policy:

1. List the Trust as the Primary Policyholder- You can list the trust as the primary policyholder with some insurance companies. This approach lays out the trust’s ownership clearly and complies with the legal and insurance requirements. This can speed up claims since there is no confusion about ownership.

2. Adding the Trust as an Additional Insured or Additional Interest - Another easy and more popular option is to add the trust as an additional insured or additional interest to your current policy. This will keep the trust identified as the owner of the property without needing to revise your insurance.

Both options are designed to match the title of the property in your trust with your insurance, and which one is best for you depends on your insurer’s terms and conditions.

Given the most recent wildfires in California, you absolutely want to make sure that you take the proper steps to ensure your trust-owned property is property protected by dotting all i’s and crossing all t’s.

Why?

Because California’s increasing wildfire risks have led many insurers to cancel policies or deny claims, especially in high-risk zones. 

How To Make Sure Your Assets Are Protected?

Here are a few things you can do to help safeguard your property and make sure everything is listed correctly:

1. Review Your Policy: Verify whether the trust is listed as the policyholder or an additional insured.

2. Communicate with Your Insurer: Speak with your insurance provider about the best way to align your coverage with the trust’s ownership.

3. Update Documentation: Keep records of any policy changes to avoid future disputes.

4. Consult Professionals: Most importantly if you’re not sure on procedures, law or guidelines it is essential to work with an estate planning expert to ensure your trust and insurance policies are fully aligned.

Properly insuring trust-owned property is more than just an administrative task—it’s a safeguard against potential financial ruin. 

Don’t wait until it’s too late! Contact me today at 📞 818-436-2775 to to review your estate plan and insurance coverage.

DISCLAIMER: The content contained herein is for general informational purposes only.  These materials do not constitute legal or other professional advice.  We do not accept any responsibility for any loss that may arise from reliance on this information.  No reader should act or refrain from acting based on information contained in this article without seeking advice of counsel.