Future File / Blog / Your Trust and You – Who is Really Insured?

Your Trust and You – Who is Really Insured?

Deep Estate Planning Insurance Concepts That You Can’t Afford to Ignore…

Revocable Living Trusts have exploded in popularity during the past two decades. Attempting to replace the simpler will, Living Trusts can be used in their place to function in a method that more closely aligns with their grantors’ wishes. Many consumers are urged to create living trusts because of the complex world of state probate laws and insidious costs.

However, once you establish a living trust, your work has just begun. The obvious first significant steps are to transfer your home into the revocable living trust. The moment that any of your real properties enters a trust form of ownership – a new problem is established.

The home insurance policy that you have had for decades typically insures you and your spouse.  By definition, it probably covers resident family members such as your children.  But it does not cover businesses you own and probably does not cover the trust that you just established. Home insurance policies were established to cover people and their homes, not legal entities.

Why Do You Need to Add Trust Coverage to Your Home Insurance Policy?

It is difficult to explain to consumers exactly why your trust needs to be added to your home insurance policy, but the simplest explanation is that your trust now owns your home – you do not.  Many attorneys downplay the transfer of ownership saying that “nothing really changes” but from an Insurance Companies Standpoint – this is distinctly incorrect.  A Revocable Trust could, in theory, bring countless new exposures to the home insurers risk pool, therefore they have to be careful covering them.

Since your home is owned by your trust, any potential litigation concerning the property may apply to either you or the trust or both.  Therefore both you and your spouse and your trust all need to be listed on the insurance policy.

The Great Debate:

There is a serious debate within the insurance community about best practices concerning coverage of Revocable Living Trusts with home insurance policies. Some insurers and agents feel that insuring the trust via an “Additional Insured” is sufficient, while other agents and insurers believe that the Trust, Trustees, Grantors, and potentially Beneficiaries ought to be added as a “Named Insureds.”

The good news is that in 2011, the Insurance Service Office or ISO for short introduced, a new homeowner endorsement that more and more insurers are beginning to use. The so called ‘HO 05 43, Residence Held in Trust’ endorsement, “allows for the insurer to name the trust as named insured and to cover the grantor or beneficiary named in its schedule.” This endorsement could end up resolving some of the debate. With the creation of this new solution, I suggest that my clients do the following:

How to Add your Trust:

The best course of action once your property has been added to your trust is to immediately contact your insurance agent and inform them of the change. Listen to their experiences and their opinions about how your given insurer typically handles these creations.

In my opinion, I believe that for most people, providing coverage for revocable trusts via an Additional Insured Endorsement (HO 05 43) is enough.  Especially if your insurance company is one of the few that caters to more wealthy individuals, such as AIG, Chubb, Pure, and a few others.

In addition – If a given revocable trust reaches a certain high value, say more than $10 Million, it may make sense to have your attorney and insurance broker review your policy for potential holes with an eye towards your lifestyle and wealth.

Your insurance company should send you a trust questionnaire that you will need to fill out and sign.  They will want to know the names of the trustees and the names of all the residents of the home. They may also want to know what other properties or potential exposures the trust contains.  If the trusts owns or runs any businesses, it may make it more difficult to cover.

Up to this point, we have ignored other insurances such as boat insurance, auto insurance, life insurance, umbrella insurance, etc.  If the autos or any other insured or ‘should be insured’ items are owned by the trust, you will want to speak with your agent about their inclusion.

In regards to life insurance, you may want to name your revocable living trust as the beneficiary – depending on your situation. You should discuss this matter with your attorney to determine if this makes good sense.

One Final to Do:

Adding your trust to a home insurance policy should give you peace of mind, but do not stop there.  Don’t forget to also communicate with your umbrella insurer about the needed coverage for your trust.   If your umbrella insurer is the same as your home insurer, this may get done quickly. But, if you have a separate insurer for your umbrella, this could lengthen the process.

Don’t rest until you have a physical copy of both the home insurance policy AND the umbrella insurance policy in your hand that lists your trust and you.

Written by Scott W Johnson

Scott W Johnson is the Manager and Chief Executive of, a division of Marindependent Insurance Services LLC.  Johnson believes in deep risk analysis for his clients and rarely fails to start any home insurance review without his signature question: “Who Really Owns the House?” In his spare time, he can be found on San Francisco Bay Area trails with his family.


*The views expressed are those of the author and do not necessarily reflect those of Future File or Intercap Merchant Partners, LLC. We always recommend that you talk to a trusted advisor.