If you own a home in California, you may have already seen spikes in your homeowner’s insurance or, worse yet, been notified that your insurance carrier will not be renewing your coverage. Due to wildfires, natural disasters and some California insurance laws, more and more insurance companies are just refusing to write insurance for homeowners.

Now there is one more issue to be concerned about when it comes to insuring our home and this came to light as a result of the Los Angeles wildfires and the massive devastation of homes. If you have gone through the time and expense of putting together an estate plan which includes a revocable or living trust, you have also, most likely, transferred the title of your home to your trust. Making sure our assets are held in the trust title ensures that our estate plan will work the way we want it to when the time comes.

Recently, the estate planning community became aware of a situation in which a Los Angeles homeowner was denied his insurance claim because he had not notified his insurance carrier that he had transferred the title of his home to his trust. His home burned down in the fire and, when he asked the company to provide funds to rebuild, they pointed out a clause in the policy which stated that the company must be notified on change of ownership. He had not notified them.

The bottom line is, when you transfer title of your home to your trust, notify your carrier. Unfortunately, with insurers becoming so skittish about writing policies in California, they could use this change of ownership to discontinue coverage! Regardless of the risk that your insurance company might back out, you should still notify them if you have transferred title to your trust. You don’t want to have a loss, report it to your insurer and have coverage denied due to a “loophole” set out in the policy.

If your insurer backs out of providing coverage, contact The California Fair Plan which can be found at: www.cfnet.com or (800)339-4099. Remember, however, that the coverage that The California Fair Plan provides is limited so you may need to add additional policies to cover liability and other coverage normally provided under a standard homeowner’s policy.

Further, advise your successor trustee or executor that they must contact your insurer when you pass away and they step in to take care of the administration of your estate. If a fire or other loss were to occur during the administration of your estate, without such notification, an insurer could deny coverage. As a professional trustee, we find that upon this kind of notification most insurance companies let us know that they will not renew when the next renewal date comes up. In this way, at least we are confident that until that date we have coverage and if the home is not sold or distributed to heirs before then, we will need to get coverage through The Fair Plan.

There are so many ways to get tripped up when it comes to estate planning and the insurance issue is just one more. Speak with your insurer to be sure coverage will continue if your home has been transferred to your trust and warn your successor trustee. Forewarned is forearmed.

Liza Horvath has over 30 years of experience in the estate planning and trust fields and is the president of Monterey Trust Management, a financial and trust management company. This is not intended to be legal or tax advice. If you have a question call (831) 646-5262 or email liza@montereytrust.com