Individual Names vs. Trust Names in Real Estate Insurance
My husband and I each have our own trusts, while my sister and brother-in-law share a trust. Together, we all co-own a rental property with equal shares.
We’re wondering if it’s better to list our individual names on the property insurance or include the names of our three trusts. Our main concern is ensuring we’re fully covered in case of a fire.
The reason I’m asking is that an insurance representative informed my husband that there wasn’t enough space to include the names of the trusts. Instead, they suggested listing only my husband’s name and my brother-in-law’s name.
When it comes to insuring a property held in trusts, it’s generally best to list the names of the trusts on the property insurance policy. This is because the trusts are the legal owners of the property, and listing them ensures that any claims or liabilities are properly aligned with the owners of the asset.
While it may seem simpler to list individual names due to space limitations, doing so could create complications in the event of a claim. If a fire or another incident occurs, the insurance company might question the validity of the individual names being listed as owners when the property title is held in trust.
Here are a few options you could consider:
Contact Your Insurance Company: Discuss the issue directly with your insurance representative. Ask if they can accommodate listing the trusts in a different format or if there are other solutions they can offer.
Review Policy Limits: Clarify that all parties are adequately covered under the insurance policy, especially since you’re all equal shareholders. Make sure that the overall coverage amount is sufficient to cover potential liabilities or losses.
Consult a Real Estate Attorney: It may also be beneficial to speak with a real estate attorney or an insurance broker who specializes in trust-related issues. They can provide guidance on how best to structure the insurance policy to fit your specific situation.
Consider an Endorsement or Rider: If space is limited, ask if the insurance company can add an endorsement or rider that references the trusts in a way that maintains coverage.
Remember, having the correct names on the insurance policy can prevent potential disputes during a claim process and ensure that all parties are properly protected. It’s great that you’re being proactive about this!