Homeowners Ins. and a Trust

Does my Homeowners policy cover my home and personal property that is in a trust? More and more property owners are establishing trusts, usually revocable living trusts. Trusts are a great way to avoid or reduce probate costs. But, putting your home or car in a trust can create other problems.

Did you know that a trust is a separate legal entity?

Legally, a trust is like a person. When you sign your home over to your trust, it is no longer yours. It belongs to this new person you have created.

So what?

So you better tell us about it, so we can add the trust to your insurance policy, so the insurance policy will cover the trust.

What happens if I do not tell you about the trust?

Legally, you can not insure something that does not belong to you. Sure, you can buy a policy on it, but you would be throwing your money away. If the company found out you did not own it, they would not have any legal obligation to pay you for it. Since the trust was not named on the policy, they don’t insure the trust, and they don’t have an obligation to pay the trust.

So the answer depends on how generous the insurance company is feeling. They may accept that it was an honest mistake and protect the trust the same as they would you. But do you really want to rely on that?

What do I do?

Just tell us about it. If you tell us about the trust, we will get it insured. And it usually does not cost a cent.

By the way, the same goes for an LLC or partnership.