Practice Alert: Homeowner’s Coverage Doesn’t Extend to Trust

Floyd lived in a house owned by Floyd’s revocable trust. But the homeowner’s insurance policy was issued to Floyd individually.  After Floyd died, a family member was in the house removing personal property and was injured.  That injured person sued the Trust and was awarded $100,000.  Trustee submitted the award to the insurance company for payment, and the insurance company denied coverage, saying that no one told them that Floyd had died, and their policy was with Floyd, not the Trust.

The trial court noted that the insurance company had collected premiums for the period at issue, and said they were estopped from denying coverage. The Court of Appeals reversed, arriving at the conclusion:

The Trust was not an insured under a policy issued by Fremont. Fremont therefore was not obligated to provide coverage to the Trust for plaintiffs’ judgment and Fremont was entitled to summary disposition of plaintiffs’ claims.

With respect to the insurance premiums which were collected for the period after Floyd’s death, the COA seems to say that to the extent the acceptance of premiums created any contractual obligations, it would have been a contract with the estate, but the estate is not the trust.

To read Thompson v Fremont Insurance Co., click on the name. The case is unpublished.

The result seems harsh, but assuming it accurately states the law, this case serves as a warning that clients (and perhaps lawyers) need to let the homeowner’s insurance company know when they have placed their house in trust. Something to add to the checklist perhaps.