Do additional insureds apply to a revocable trust?

July 28, 2022
Dear Clients and Friends:
In a prior LISTEN TO LAWRENCE LETTER (Volume 3, Issue 45), I discussed the need to make the IRREVOCABLE Medicaid trust an “additional insured” on your homeowner’s insurance for all properties in your trust. The reasoning was that we would want any claims paid out to be paid to the trust, to continue the protection. This prompted these questions from two of my readers:
Lawrence, would this also apply to a revocable trust?
The bottom line answer is yes, although I will answer this from a common sense standpoint, rather than as an insurance expert.
At first blush, I wasn’t sure I cared, because if the insurance company sent you a check, you could simply put it in your bank account and then use it to fix up the house in the trust. Revocable trusts are so much more flexible, they have fewer rules. But then I got to thinking, what if you died in the fire? Yikes! If so, the check might be paid to your estate, which may have to go to probate. Better they send the check to the trust. Therefore, tell the insurance company to name the REVOCABLE trust as the additional insured as well.
Would the same hold true for a flood with Flood Insurance?
Yes, the same applies to flood insurance. If you make a claim because of flood damage and they pay you, then the money will be out of the trust and unprotected from Medicaid. Call your flood insurance company and add the trustee and trust as “ADDITIONAL INSUREDS.”
I hope this helps! Please forward this information to your friends and relatives to share these informative answers to some very commonly asked questions.
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Until next time,
peace, health, and happiness,
Lawrence Eric Davidow