Trusts are an effective tool for estate planning, tax strategy, and maintaining privacy. When you place property into a trust, the ownership is transferred to that trust. But here’s the critical part, your trust must also be protected by your insurance coverage. Making sure both you and your trust are properly listed on your insurance policy helps ensure seamless protection in the event of a claim.
How To Add Your Trust to Your Insurance Policy
- Provide Your Trust Information
Send your insurance agent the complete, legal name of your trust. - Update Your Policy
Your agent will work with your insurance carrier to add your trust as either an additional insured or a named insured depending on your goals and the carrier’s guidelines. - Receive Confirmation
You’ll receive written confirmation from your insurance company once the trust has been added. Keep this documentation with your trust documents or other important records. - Update Your Umbrella Policy
If you have an umbrella policy, make sure the trust is added there as well to ensure consistent protection.
Adding your trust correctly protects both you and the trust from liability and property insurance claims. However, if your intent is to keep your trust and personal ownership completely separate, you may need to title the property only in the trust’s name and possibly carry a renters policy for your personal property.
Risks of Not Adding Your Trust to Your Insurance
- Claim Denial Due to Ownership Mismatch
If your trust owns the property but is not listed on your policy, a claim could technically be denied. While rare, it’s better to avoid the risk altogether. - Gaps in Liability Coverage
If your home is titled to the trust and the trust isn’t insured, the trustee or beneficiaries could be left financially exposed in a lawsuit. - Potential Policy Cancellation
Insurers want a clear picture of ownership. Transferring property into a trust without updating your policy could be viewed as a material change in risk.
What Does It Mean to Add Your Trust as an Additional Insured?
Adding your trust as an additional insured ensures that:
- The trust is covered under your homeowners or property insurance policy.
- The trustee is protected if a property or liability claim arises.
- Claims won’t be delayed or denied due to ownership discrepancies.
It’s important to note that:
- Additional Insured provides full policy coverage to the trust.
- Additional Interest/Interested Party only notifies the insurer of the trust’s involvement but does not extend coverage.
- Named Insured lists the trust as the policyholder. If you live in the home, you’ll likely want to be listed as a named insured as well.
FAQs About Trusts and Homeowners Insurance
Does my current policy already cover my trust?
No. Your trust must be specifically listed on your policy as an additional or named insured. Otherwise, coverage may not extend to your trust, trustee, or beneficiaries.
Will adding my trust increase my insurance premium?
No. Adding your trust is generally a simple endorsement with no additional cost.
Talk to Hunter Insurance
Adding your trust to your homeowners or property insurance policy is an important step in protecting your estate plan. At Hunter Insurance, our knowledgeable team will guide you through the process and ensure your coverage is aligned with your goals.
Hunter Insurance does not provide legal advice. Please consult your attorney regarding the formation of trusts or LLCs.
For information on insuring property in the name of an LLC, contact a Hunter Insurance agent today.