What Happens if I Didn’t Add My Trust to My Home Insurance Policy?

Although adding a trust to your home insurance policy can help you avoid issues such as probate, many individuals fail to take the correct steps. As a result, the trust isn’t permitted to be adequately covered by a current provider. There are some disadvantages to not adding your trust to your home insurance and methods to avoid these risks.

Benefits of a Trust

You can transfer your home ownership from your name to your trust, which provides various advantages, such as passing your property to beneficiaries without needing a court order. Another benefit is the ability to allow your successor to step in if you become unable to manage your affairs—this is referred to as incapacity protection. Regardless, your trust will remain private, never becoming a public record.

Smoother estate distribution is one reason individuals add trusts to their home insurance policies. Your wishes are always a top priority.

Protection and Liability

Once your home is placed in a trust, the property is owned by the trust, not you. The downside is that your policy is still under your name, causing claim denial and other problems due to the mismatch. The provider could argue the valid owner hasn’t filed the claim if your trust isn’t listed.
Adding your trust to your home insurance policy correctly reduces the risk of beneficiaries and trustees being financially vulnerable if injuries and other issues occur on your property. For example, suppose a guest falls at your home, whether inside or outside, due to a mishap in the exterior landscaping or the interior flooring. In that case, that person can sue you for medical and financial needs.

Although you have homeowners insurance, the policy may not extend to your trust when it’s improperly listed.

Misconceptions

Adding a trust to a policy comes with many concerns, so homeowners often avoid taking the necessary steps. For instance, people may feel the process is complicated or be afraid their premiums will increase if they do so. These are misconceptions.
Adding a trust to your home insurance policy is generally a straightforward process that requires the proper requests and documentation to be submitted. Regarding premium increases, most providers don’t raise premiums, but an administration fee could be required. Again, this varies, so it’s best to speak with your insurance provider for clarity.
Every situation will vary, so you should never allow the misconceptions to stop you from adding a trust to your policy. Doing so can increase the odds of cancellation, as some providers view the transfer as a material change in risk. Adding the trust as an additional insured could offset this risk.

Safeguarding Your Home and Assets

In some situations, coverage is extended to the policy, but this isn’t always true. Therefore, you need to speak with professionals who can inform you if your trust is set up correctly for your home and other assets, help you learn more, file correctly, and avoid financial setbacks or legal mishaps. Having your trust correctly covered should be the focal point.

When searching for a reputable insurance company in San Diego, ask professionals what it takes to have a trust listed on your current or future policy. A representative should go over your options, ensuring your assets and home are safeguarded.                                                        

Knowing who to list on your homeowners policy can ensure you have the right coverage for your needs. For reliable, affordable home insurance, San Diego homeowners know they can trust Altra Insurance Services. We also provide renters, commercial, motorcycle, and car insurance Chula Vista residents can depend on. Request a free quote by calling one of our friendly agents today.