In this Vlog, Litherland, Kennedy & Associates Attorney Justin M. Kennedy discusses the importance of adding your Living Trust as an additionally insured on your Homeowner, Fire, Earthquake, Flood and Title Insurance policies.
Transcript:
Hello, I’m attorney Justin M. Kennedy with Litherland, Kennedy and Associates, a California estate planning and elder care law firm.
With the recent fires in Los Angeles, we wanted to take a moment to remind you that if you have moved your real estate into your Living Trust, which is our recommendation, then you need to contact your insurance carrier regarding any insurance on your real property including but not limited to:
• Your homeowner insurance
• Fire insurance
• Earthquake insurance and/or
• Flood insurance
to advise of the change of title, otherwise, it is possible that in the event of a loss, the carrier may deny coverage claiming that the new titled owner is not the insured.
You may update the ownership of the policy into the name of the Trust or add the Trust as an additionally insured upon the policy.
Most people are aware of their homeowner and related insurance, but many do not know that they likely have a Title Insurance policy as well. You usually get a one-time payment Title insurance policy when you purchase a property or borrow or refinance against a property, as the lender usually requires a current Title Insurance policy to confirm that you do actually own the property. When you change title to your property into your Living Trust, you may want to contact the company that issued your most recent title insurance policy to inform them of the change of title and to request an “Endorsement” (form CLTA 107.9) that recognizes the property’s change of title into the Trust. If you do not obtain an endorsement or a new title insurance policy, it is possible that the existing title insurance company may deny coverage should a problem with your title arise, claiming that the Trust is not the insured.
With that said, it is important to know who is at a higher risk of a title insurance claim or not.
Many times a title insurance claim may come about because a neighbor feels that the fence is on their land rather than on the dividing line. This is where the title insurance company could fight the court battle on your behalf. However, for a planned community this is a low risk as there are plot maps that clearly mark off the property lines.
This is far more of a concern for my clients who live in the Santa Cruz mountains where the plot lines may be more open to interpretation. For example, I have seen legal descriptions for property that reference a pipe in the ground as an edge marker of the property. An earthquake or mudslide could move that pipe and shift the property line – which could cause disputes between neighbors.
If you are in a planned community, contacting your title company is less of a concern than if you are in mountainous or otherwise open land.
If you are at all concerned about the title to your home or fear a dispute with a neighbor, then please contact your title insurance company. If the company is unreachable, then you may need to purchase a new title insurance policy.
EVERYONE though needs to contact your homeowner insurance company and any other insurance you have on your home and other real estate to tell them that the property is in the name of your Living Trust and that the Living Trust needs to be added as an additional insured.
Thank you.
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