How to Properly Insure a Home Held in a Trust
- Cork Rech
- May 1
- 3 min read
By Cork Rech, CCCFPD CWPP Implementation Committee
United Policyholders (www.uphelp.org) states that, as of February 2025, more than 37,000 insurance claims have been filed by property owners impacted by the January Los Angeles wildfires. One of the many related issues those claimants are working through is denied claims because their home is held in a Revocable Trust, but the trust was not listed as an “additional named insured” on their insurance policy.
Why You Need to Name Your Trust as an Additional Insured on Your Property Insurance
When you place your property in a revocable living trust, you’re taking an important estate planning step. However, many property owners overlook a crucial detail: updating their insurance policies to reflect this change in ownership. Understanding why you need to name your trust as an additional insured is essential for maintaining proper coverage and protecting your assets.
The Legal Framework: Property Ownership and Insurance
When you transfer property into a revocable living trust, the trust becomes the legal owner of the property, even though you maintain control as the trustee. However, placing your property in a trust may create problems with homeowner insurance coverage. The property’s legal owner (the trust) is now different from you (an individual) if you are the named insured on your insurance policy. Insurance companies are becoming very particular about ensuring that a named insured matches the legal owner of the property.
Why This Matters: The Risk of Denied Claims
An insurance adjuster and/or the insurance company that employs them may deny a claim where there’s a mismatch between the property’s legal owner and the named insured on the policy. There are several court decisions upholding their right to do so. Here’s why:
Insurance policies operate on the principle of insurable interest – you can only insure property in which you have a financial stake. Although it has been widely understood that you are still the beneficial owner of the assets for income tax, estate tax and liability purposes, insurance companies may argue that when you transfer property to a trust, you technically no longer own it as an individual. Instead, the trust owns it, and you manage it as the trustee.
Many people believe that since they are the trustee of their revocable trust, naming the trust on the policy isn’t necessary. However, insurance companies view the trust as a distinct legal entity, regardless of your role as both grantor and trustee.
The Solution: Adding Your Trust as an Additional Insured
When seeking a new insurance carrier or to maintain seamless coverage, you should:
Contact your insurance agent/broker immediately after transferring property into a trust.
Request that the trust be added as an additional insured on all your policies, including your landlord coverage for rental properties and supplemental flood and earthquake insurance. This should not increase the cost of your insurance.
Ensure the trust’s name is listed exactly as it appears on your trust documents.
Obtain written confirmation of this change from your insurance company and agent/broker.
Benefits
Adding your trust as an additional insured:
Ensures continuous coverage without gaps
Protects both you and the trust’s interests
Maintains the integrity of your estate plan
Prevents potential claim denials
Provides peace of mind knowing your assets are properly protected
Conclusion
While it may seem like a minor detail, naming your trust as an additional insured is a crucial step in protecting your assets. Your home probably represents the bulk of your estate. Consult with your insurance agent and estate planning attorney to ensure your trust and insurance arrangements work together seamlessly to protect this hard-earned asset.