Insurance Woes In Estate Planning

You want to make sure that you avoid any insurance woes when you are doing estate planning or  administering an estate.

On the estate planning front, you always want to make sure that the information your insurance agent has is current. This means that they know who’s living at your home; what vehicles are parked there; what’s stored in any accessory structures; et cetera. If there’s any space in a home that’s used for a business there should be separate coverage under a commercial insurance policy for that space. The business use might be an office/storage space or in a garage structure. Your homeowner’s insurance does not cover spaces that are used for business purposes (even if they are inside your home).

You also want to ensure that your all of the property owners are named insured parties or additional insured on insurance policies. This means that if your home is titled in the name of your trust that your trust is a named insured or additional insured. That way if someone slips and falls on the property and sues the insurance company will defend the lawsuit.

When you are administering an estate you need to communicate with the insurance agent as well. The insurance agent should be notified promptly after the death of the decedent. When someone planned to avoid probate by planning with a Transfer on Death Designation Affidavit, the Homeowner’s insurance doesn’t cover the beneficiaries. That means that the coverage effectively stops upon the death of the deceased owner. It is very critical to get new insurance in place because vacant homes are often at a higher risk for theft, water damage, etc.

Almost all insurance woes can be avoided by communicating with the agent. If there’s something your unfamiliar with, ask your agent. Be sure that they fully understand your question. Maybe even have them come by to look at the risk.