We recently had a client tell us that her neighbors who own a home in the Pacific Palisades were told by their insurance company that because their homeowner’s insurance was in their personal names and their home was titled to their revocable trust that the homeowner’s policy wasn’t going to pay for their loss. This is devastating! Several years ago in Houston after the floods, FEMA argued that when the home was the owner of the home, the homeowner wasn’t an individual and FEMA only covered individual homeowners. The Houston issue was resolved in favor of the homeowner. But when you’ve created a revocable trust or a limited liability company (LLC), it’s usually part of a larger asset-protection and estate-planning strategy and you often aren’t thinking about catastrophic fire or flood. We always list contacting your insurance company to list the trust or LLC as an additional insured as a “must -do” homework action item because this one oversight can undo the entire estate plan and strategy.
1. The Hidden Risk: Title Without Coverage
Imagine your trust or LLC holds title to a home, ranch, or rental property. If your homeowner’s or liability policy is still issued in your personal name, the titled owner—the trust or LLC—may not be covered if there’s a claim.
That means if someone slips and falls on the property, the entity that actually owns it could be left completely uninsured, exposing your personal wealth to litigation.
2. Why Listing an “Additional Insured” Matters
Adding your trust or LLC as an additional insured extends your policy’s protection to the legal owner of the asset. This ensures that:
- The insurer recognizes the entity as having an insurable interest.
- Defense costs and liability limits apply to the trust or LLC as well as to you.
- There’s no dispute over coverage if a claim arises after title has transferred.
It’s a minor administrative step that can prevent catastrophic financial loss.
3. How to Add an Additional Insured
Contact your insurance agent and request that the trust or LLC be listed by its full legal name—for example:
“Thrash Family Revocable Trust dated March 15, 2023”
or
“Carroll Holdings, LLC”
Confirm this change in writing, and request an updated declaration page showing the additional insured endorsement. This documentation becomes critical proof of coverage.
4. Beyond Real Estate: Vehicles, Umbrella, and Business Policies
This step applies to more than just real estate:
- Vehicles titled to an LLC – Ensure the LLC is an insured party on auto policies.
- Umbrella policies – Verify they “follow form” to cover the trust or LLC.
- Business insurance – If your LLC owns business assets, confirm entity coverage on general liability and E&O policies.
5. The Estate-Planning Perspective
From an estate-planning standpoint, this step ensures continuity. After your passing, your successor trustee or LLC manager won’t face coverage gaps while administering or liquidating assets. It’s also an important layer of liability protection consistent with the purpose of forming an entity in the first place.
Final Thought
You’ve built a solid plan—don’t let a paperwork omission unravel it. Naming your trust or LLC as an additional insured is a simple, inexpensive safeguard that strengthens your entire protection strategy. Contact your attorney at Thrash, Carroll & Sanchez Law Group at info@tcslawgroup.com or at 512-263-5400 if you have any questions or concerns.