Rental Property Investor · Orlando, FL · Member since 2016 · 111 posts · 13 votes
Hi everyone
I recently added a rental property to a land trust under the advice of my attorney. Well imagine my surprise (and irritation) when the insurance company said it was not within their underwriting guidelines to insure the trust. And in addition, since i had already put the property in the landtrust and changed the deed , im going to lose my coverage. My attorney said they had never heard of this and that in their experience its never been a problem to add a land trust as an additional insured . My insurance company is Peoplestrust. Has anyone else had this issue? Is it just that peoplestrust sucks or is this a common issue? Im looking for recommendations for insurance companies that are ok with adding land trusts as additional insureds. Im in Florida. Any recommendations would be appreciated. thanks!
I am a commercial insurance agent with clients in Florida and there are several other carriers that will list a Trust as an Insured on the policy. I have a few clients that have insured their properties thru their trusts. Not sure why Peoples Trust would have an issue with that set up but, then again, this is the same company that was suing their own insureds in the Tri-county area to avoid having to pay hurricane claims.
I would just call up any of the 10 other insurance agencies in your area and get coverage through them. I don't have any land trusts but they are used and I can't imagine the people that use them don't insure their investments.
I am a commercial insurance agent with clients in Florida and there are several other carriers that will list a Trust as an Insured on the policy. I have a few clients that have insured their properties thru their trusts. Not sure why Peoples Trust would have an issue with that set up but, then again, this is the same company that was suing their own insureds in the Tri-county area to avoid having to pay hurricane claims.
@Ian yeah im really beginning to dislike peoplestrust.
Can you send me your contact info Ian? im gathering quotes now from other carriers. I want to be listed as the insured with the trust listed as an additional insured. That would be my preferred way to go.
@Martha Daisley I have not heard of this either. When you say "Insure the trust" that language is interesting to me. They are insuring a property held by the trust, not the trust itself.
I hold dozens of properties in trusts--never had a problem. Shop around--you may just get better coverage for less money. Let us know how you make out.
Yes, they would be insuring a property that is owned by a land trust. But sometimes they wont do the liability piece if you list the trust as the primary insured so the preferred way to go is to have yourself listed as the primary insured and add the trust as an additional insured. That way you dont have to go take out a separate liability policy.
I did find a couple of agents that got me some quotes from insurance companies that would do it, but everything is much more expensive than what i pay now. :(
i own houses in trusts as well . Dirt cheap insurance too ! Shop around because your dealing with a loser company not worth working with if they don’t understand or insure something as basic as a trust agreement
The key challenge with homeowners insurance and trusts comes from the nature of insurance. When you purchase a homeowners policy, you might think you are insuring your home, but you aren't. You are insuring yourself (or whoever owns the policy) against something bad happening to the home or at the home. When you throw a trust into the mix, you end up muddying the picture of who is insured and who isn't.
Whether or not your insurance agent will write an insurance policy with your trust named, it might not be a good idea for you. If your trust is the only entity on your policy, you get no protection. For instance, if a guest comes to the house, you make dinner, and you give them food poisoning, you would technically have no liability coverage. The trust would, but you're the one that made the dinner, so you would have no coverage. On the other hand, the insurer might also not want to extend personal liability coverage to the trust, which could end up being a broad grant of protection.
Writing your trust as the insured party could also interfere with your personal property's coverage. If your trust owns the house, but you own your TV and furniture, those personal property items could end up without coverage if the house burns down. If you want, though, you may be able to write the policy in your own name and have your trust be an "additional insured." This can keep your coverage intact and protect your trust's interests.
Your homeowners insurance isn't the only thing impacted by a trust. It can also cause issues with the title insurance that protects your ownership rights in the property, as well as potentially make it hard for anyone to get title insurance in the future. The examiners who look over properties before issuing title policies may want to see your trust agreement to ensure there aren't any issues that could cloud the title, and this can defeat the trust's ability to protect your privacy. These issues can be handled through the creation of a special nominee partnership, though, although you may want to get an attorney's advice and help.
Hoping all of this was helpful, I went broad to hopefully cover some other topics that may not of came up quite yet.
Yes, my ideal scenario would be to stay on the policy as the insured and just add the trust as additional insured. Doing it this way seems to be more expensive though, from what i see in the quotes im getting.
One question, you said the trust could cause issues in the title insurance. would that be if you are selling the property? My attorney said we would take the property out of the trust if selling it.
By the way, your title says contracting developer. Do you do rehab projects ?
In the case of a rental property in a land trust, my preferred way is to have the land trust as named insured. It is important as the trust is the party named on the deed and would be the primary target. Also in case of a mortgage, that should also be the same name.
Most insurance I had with land trust were automatically covering the beneficiary of the trust in their policy. I had however make them add as additional insured the beneficiary, the trustee and the property manager.
Once in a while I had an insurer ask some more information about the trust, but it was limited to who where the parties involved (trustee and beneficiary). I never had to provide a certificate of trust nor the trust itself. They were all looking at how the property was titled to the land trust and that was enough for them.