If you own a home and have a trust, you must understand the recent case decided by the Michigan Court of Appeals. The case is titled Thompson v. Fremont Insurance, and here are the facts:

Floyd lived in a house, but the house was owned by Floyd’s revocable What if an Executor Fails to Probate a Willtrust. When Floyd purchased insurance on the house from Freemont Insurance Company, the policy was issued to Floyd individually (not to the trust).
After Floyd died, one of his relatives, Arthur, was working at the house and was injured when he fell through a flight of stairs.

Arthur sued the trust (which was the owner of the house) and was awarded $100,000 for his injuries. The trustee of the trust requested that the insurance company pay the award, but the insurance company denied coverage. In short, the insurance company said that the policy insured Floyd, individually, and not Floyd’s trust which owned the home.

Although the trust won its argument at the lower court level, the Michigan Court of Appeals reversed, holding that there was no insurance coverage for the trust. The Court concluded:

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 [of $100,000]. . .

The result seems severe, but it should serve as notice to everyone who has a home deeded to their trust that they may not have insurance coverage. There is a simple fix: Call your insurance agent and tell him or her to “add my trust as an additional insured to my homeowner’s insurance policy.”  

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