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Risky Business Insuring Trusts And LLCs

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It’s not uncommon for assets such as homes, boats or other properties to be placed into trusts and limited liability corporations (LLCs). However, these vehicles can present unexpected risks if inadequately or improperly insured – or inadvertently, not insured at all.

To best protect your wallet and assets, it is important to understand that insurance on property that has been put in a trust or transferred to an LLC can be handled one of two ways: The LLC or trust can be named insured, or it can be the additional insured or interest on the policy of the person who placed the property in the trust or transferred ownership to an LLC.

For example, if a house is put in a trust that is named insured, the beneficial owner will probably have to purchase supplemental renter’s insurance to protect the belongings within the house. However, when the trust or LLC is named additional insured or interest on the policy, the beneficial owners likely don’t need a separate renter’s policy or personal liability policy for the property.

To ensure your unique insurance needs are covered, take the time to sit down with your agent or broker, and financial advisor, to discuss your coverage and legal entities. For more information, check out my recent ThinkAdvisor column.

— Fran O'Brien is President, Chubb Personal Risk Services

This article originally appeared as “The Hidden Risks of Holding Assets in Trusts and LLCs" on the Risk Conversation blog on August 31, 2017.

 

 

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