Avoid the Unpleasant Surprise With Your Homeowners Insurance

Today, I want to talk a little about your homeowner’s insurance. Recently, I’ve seen a few articles talking about insurance carriers who are declining coverage relating to the fires in California. The two recent stories were because the property was in a trust, but the insurance was in the name of the borrower or homeowner. Apparently, there is a technicality in some of these policies that would allow the insurance carrier to decline coverage because they say that the property wasn’t protected by the policy.

I did a bit of research on this topic. I know a lot of people who have family trusts. And, quite frankly, if you don’t have a trust, then you should probably think about getting one if you own a house. What I learned is that some of these insurance carriers can decline coverage if your house is in a trust but the insurance is linked to a personal name.

How to Get Around This Problem

The good news is that there is a way to get around this issue. The first step is to call your insurance company and figure out what you need to do. You want to solve this problem as soon as possible to avoid any issues in the future.

What I learned in my research is that you need to add your trust as an additional insured on the policy. While this could potentially solve the problem, don’t make any assumptions without having a conversation with your insurance carrier.

You need to be sure that you have the green light from the insurance company that your home will be covered if anything happens. The worst case scenario is what some homeowners have been up against in LA: now they are in a position where their house is either partially or fully destroyed, and now the insurance is trying to act like they’re not going to cover the damage – because of a technicality.

Of course, you can expect that the insurance company is always going to try to find reasons to not cover you. They are publicly traded companies and care about their shareholders. But that’s a whole different topic.

Make Sure Your Insurance Coverage is Right

The most important takeaway that you need from this video is to make that phone call to the insurance company if your property is in a trust and the trust isn’t named in the insurance policy. You need to verify that your home is going to be covered by the policy. This shouldn’t take more than a few minutes, but it will make a big difference if you need to make a claim in the future.