Avoiding Insurance Claim Denials: Ensuring Proper Coverage for Trust-Owned Properties

With the increasing frequency of natural disasters across the U.S., including wildfires, hurricanes, and severe storms, homeowners insurance policies are facing stricter scrutiny from insurers. As companies reassess risks and tighten policy requirements, it is more important than ever to ensure your trust-owned property is properly covered.

If your home is in a trust but your insurance policy is still in your individual name, your claims could be denied—leaving your estate and beneficiaries vulnerable.

Is Your Trust-Owned Property Properly Insured?

Many insurance companies now require that the trust itself be listed as the insured party, with the trustee named as an additional insured. If your policy does not reflect this change in ownership, insurers may use it as grounds to deny a claim—especially in areas prone to wildfires, hurricanes, and floods. And as we know, if an insurance company can get out of paying anyone, they will.

What Should You Do?

✔ Review Your Homeowners Insurance Policy –

Ensure that the insured name includes both the trustee and the trust.

 ✔ Contact Your Insurance Provider –

Clarify their requirements for trust-owned properties, particularly in disaster-prone areas.

✔ Add the Trustee as an Additional Insured –

This ensures uninterrupted coverage and prevents potential claim disputes.

Occupancy Changes: Does Your Policy Reflect Your Current Use?

Another critical issue is how the occupancy of your home affects your insurance policy. Homeowners policies are structured based on specific occupancy types, including:

1. Primary residence (owner-occupied)

2. Secondary residence (vacation home)

3. Rental/landlord property (leased to tenants)

Given the recent surge in catastrophic weather events, insurers are becoming more stringent about occupancy changes. If your policy does not match your home’s current use, your claims may be denied or significantly delayed.

Common scenarios requiring a policy update:

✔ Renting out your home (Primary to Landlord)

✔ Moving out and using it as a vacation home (Primary to Secondary)

✔ Allowing family members to live there without a formal lease

How to Avoid Issues?

Confirm the Occupancy Type Listed on Your Policy –

Ensure it aligns with how the property is being used.

Notify Your Insurance Carrier Immediately –

Update your policy to reflect any changes in use, especially if you live in high-risk disaster zones.

Review Your Policy Annually –

Many insurers are non-renewing policies in high-risk areas, so it’s critical to check your coverage.

Don’t Wait Until It’s Too Late

With insurance companies increasing policy cancellations and premium hikes due to natural disasters, it’s crucial to be proactive.

Discovering gaps in coverage after a disaster or claim can lead to devastating financial consequences. Ensure your trust-owned property and any occupancy changes are properly documented before an emergency arises. So give your agent a call to review and update your policy.

For more information on estate planning and trust-related property ownership, schedule a meeting with us today. We specialize in ensuring that your estate planning and financial protection strategies work hand in hand.

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