If you are a successor trustee of a trust, or the personal representative (executor) of an estate, one of your duties includes preserving the assets so that they can be disposed of according to the directions laid out in the trust or will or under the law. some assets like real estate or automobiles or boats and so on, might be insured.
But who is the insured?
If the trust was properly funded, after the creation of the trust, folks should have quickly gotten ahold of various financial institutions to “rename” the accounts to reflect ownership by the trust. By the same token, in most instances, the insurance company covering the real estate would have been contacted, so that, any real estate held in trust, is insured in a way that reflects the trust ownership. If that was done properly, there should be few problems maintaining insurance protections on the real estate.
If no trust was established, and you are administering an estate after the death of the owner, the insurance in place covered the late owner. Once they die, you should scramble to make sure the estate is covered, since many insurance companies, and the law, distinguish between these “ownerships” meaning the person, or their estate, post death.
There are so very many things to handle once someone dies — but one critical task will involve insurance. You should jump on that, to avoid a possible loss of coverage.
So make sure you contact the insurance company/agent right away to make sure that the home or other insured property is still covered–perhaps with a change of policy, or an endorsement or rider, so that the estate, or the trust, is the insured going forward.
Otherwise, should a claim arise, even though payments of premiums have been made, the insurance company may argue there isn’t a valid coverage in place. Rather than cover the loss of the home, they might just send the premium back. (And if you have an entire loss of a home, you sure don’t want a lousy thousand or two sent your way as you look at a pile of ashes or a home torn apart by a tornado.) While various equitable arguments might come into play, remember that equity is often given a sort of 2nd class legal status if the contract itself is clear.
If you are not an attorney, it might be smart to engage a law firm to help you carry out your duties as the administrator of the estate or trustee of the trust. We help folks wrap up estates and trusts, should you be interested. But whether you do that or not, be sure to make sure insurance is taken care of right away. Don’t delay.
Although not a published decision, this case out of the 6th Circuit Court of Appeals, should serve as a warning to folks who might be casual about insurance arrangements:
Boby Davis v. Westfield Ins. Co., No. 21-2797 (6th Cir. 2022)