Name Your Trust on Your Insurance Policies

Should You Name Your Trust on Your Insurance Policies?

Some background on deeds, first.

A grant deed is a legal document used to transfer ownership of real estate from one person or entity to another. It's commonly used in California, though other states may use similar deeds with different names, such as warranty or quitclaim deeds.

Under California law, property may be held in trust; however, the trust itself does not hold legal title. Instead, legal title is held by the trustee(s) in their official capacity, acting on behalf of the trust.

The grant deed should therefore name the trustee(s) as titleholders; for example, "Jane Doe, as Trustee of the Jane Doe Living Trust dated January 1, 2020."

This distinction is important not only for clarity in ownership but also for insurance and liability purposes. Confusing the trust and trustees, or naming the wrong party on insurance documents, can unintentionally broaden or misassign coverage.

So yes, you absolutely should add your trust as an additional insured. When you transfer your home to a trust, the trust becomes the legal owner of the property, so you need to update your insurance policies accordingly.

Many of these same principles apply if your home or property is titled in an LLC for estate-planning or liability-protection purposes.

The problem is that some brokers and agents might not know how to ask the question unless it's part of their daily application process. Trust attorneys and financial advisors often overlook this detail, too.

A note on umbrella policies: Umbrella policies are "form following," meaning they provide coverage above and beyond the underlying policies. Many carriers don't always name the trust on these. However, now is a good time to review your total liability limit to ensure it covers the trust's assets.

What Happens If You Don't Name Your Trust?

It's probably not the end of the world. But you may have to do more work, go through some mental gymnastics, or even hire someone to represent you legally.

Most carriers "get it" and wouldn't make this an issue. They want to do the right thing for their insured because they have a reputation to uphold. And even the less-savvy carriers know a public adjuster would have a field day with them.

The bottom line is, why leave a gap that could be easily avoided upfront by just talking about it with your agent or broker?

Is It Hard to Add a Trust?

Trusts can often be added as an additional insured with a simple endorsement.

Other times, carriers will ask several questions to get it added. Most of these answers can be found on the Certification of Trust.

Here's what Nationwide asks, as an example:

• Who are the Trustee(s)?
• Who are the Grantor(s)?
• What is the relationship between the Trustee(s) and Grantor(s)?
• What type of trust is this (living, testamentary, or nominee)?
• What is the intent of this trust?
• Who will reside in this residence?
• Please provide a list of assets included in the trust.

Founders, Board Members, Directors & Officers

It's worth noting here that if you or someone in your household is a founder, serves on a board, or is an officer or director of a company, you can be personally named in a suit against the company and be held personally liable.

Directors & Officers' insurance is intended for this purpose. Still, not all companies (both for-profit and non-profit) carry this coverage. Additionally, you can obtain a separate, stand-alone D&O policy that protects you as an individual, not the entity.

Send This Email to Your Broker or Agent

Hi there, I want to ensure that our trust is included on our insurance policies as an additional insured. The full name of our trust, as written on our Certificate of Trust, is "[The John and Mary Smith Family Trust, Dated June 1st 1995]." We would also like to review our total liability limit to see if increased limits make sense. Please let us know when you have received this. Thank you! Signature