Chicago, IL · Member since 2016 · 20 posts · 1 vote
My mom's home was a 4 unit building, she lived in one apartment and rented the other three. She passed away and left the building, our family home, to me and my 2 siblings via a family land trust. The current home owners insurance company notified me that they need to remove her name and put someone's name in her place. They are unable to name the land trust as the insured. My one sibling currently resides in one unit and the insurance company suggests naming him on the policy and adding me and my sibling as additionally insured. Is this the route to go? What type of property insurance will protect both the property and my siblings should something happen to a renter, guest, general public or if we are sued? Please advise.
I lived in 3-plexes where I am the owner, and tenants. What they do is issue me a homeowners policy, and in addition cover the tenants. Homeowner policies are provide better coverage than landlord policies, and in particular covers you in the event you hire uninsured contractors to do work and they get hurt.
I assume you guys are trustees and beneficiaries of the land trust, so technically you guys are the owners.
If you can get a Homeowners policy, as Frank pointed out, it would be better than a Dwelling/Fire form (used for non-owned 1-4 family dwellings). The lack of coverage for the Trust would have me concerned. I would check with an attorney to see if the trust could also be named in a suit as a separate entity. If so, a portion of the claim expenses (legal fees, etc.) and the settlement would not be covered. If have to go to a Dwelling/Fire form to get the Trust covered remember that your brother would need his own Tenants/Renters policy to insure his contents, loss of use, Liability, etc.
We have more options to insure a property in the name of an LLC than in the name of a trust. You may want to look into changing the property to an LLC with the 4 of you as members. I'm sure there are tax and legal issues with that kind of change. If you are unable to find coverage locally or if you have any questions please feel free to PM me. Thanks