The devastating LA fires bring home the threat of wildfires in both our urban and suburban communities and when your in the midst of recovery, the last thing you need to worry about is issues with your insurance coverage. You may not be aware but if your property is named in your trust for estate planning and asset protection, the insurance company needs to know before a claim is filed. We're always learning something new so here's what you need to do.
1. Ensure Coverage Continuity
When you transfer your property into a trust, the legal ownership changes from your name to that of the trust. This change can affect your homeowner’s insurance policy. Insurance companies need to know the legal owner of the property to accurately underwrite the risk and ensure that coverage remains in place. Failing to update your insurer could result in coverage gaps or even policy cancellation.
2. Avoid Potential Claims Issues
If you have to file a claim and your insurance company is unaware that your property is held in a trust, there might be complications. The insurer might question the validity of the policy since the named insured on the policy does not match the current property owner. This can delay claim processing or, worse, lead to a denial.
3. Maintain Proper Liability Coverage
A trust can alter the liability coverage needed for your property. By informing your insurance company, they can adjust your policy to provide the appropriate liability protection. This ensures that both you and your trust are adequately covered in the event of an incident on your property.
Steps to Notify Your Insurance Company
Review Your Trust Documents: Make sure your trust is properly established and that you have all the necessary documentation.
Contact Your Insurance Agent and provide them with the trust documents.
Update Policy Information: Your insurance company will update the named insured on your policy to reflect the trust or add it as an additional insured.
Confirm Coverage: Once the changes are made, request a copy of the updated policy and review it to ensure all the information is correct and that coverage remains comprehensive.
So...before a disaster strikes....be proactive and notify your insurance company about your property trust. It helps to avoid potential issues with claims and maintains the integrity of your liability protection.
