In light of the recent California wildfires, we have received several calls inquiring if it is necessary to notify homeowners insurance companies of the change in ownership from the individual property owner to the property owner’s Trust.

The short answer? Yes, we do recommend that if you have a Trust you notify your homeowner’s insurance company of the change in ownership to the Trust. The insurance company may want to note the Trust as an insured party on the insurance policy.

The long answer? While most of the larger and more reputable insurance companies reportedly will not deny coverage for claims if the home is titled to the insured property owner’s Trust and the insurance company was never notified of the change in ownership, some might. Here’s why:

Policy Holder Information: Homeowners insurance policies are typically written with the name of the individual who owns the property. If ownership changes (e.g., home is titled to a Trust), the insurance company may still have the individual listed as the policyholder. In the event of a claim, the insurer may find title does not match, raising questions about coverage.

Non-Disclosure of Ownership Change: If you don’t disclose the change, it could be seen as a failure to update the policy with accurate information.

Trust and Coverage: In some instances, insurance companies may require endorsements or modifications to the policy if the home is owned by the Trust. The terms of the policy might have exclusions or conditions that apply if ownership changes.

Proactive Steps: To avoid any issues, notify your insurance company if your home is titled to your Trust. You may be asked to provide additional documentation. While insurance companies generally allow changes to the policy to accommodate trust ownership, you need to be proactive in communicating the change.

While we have never seen a situation in which a claim has been denied on the basis of failure to notify an insurance company that property has been titled to a Trust, why risk it? It’s simple – just make the call and play it safe.

In Arizona? If you have trust funding or administration questions or would like a review of your estate plan to be sure it will work for you and your family, call our office at 480-922-1010 or email info@bivenslaw.com to schedule a consultation with one of our experienced attorneys. We are here to help.