Why it’s important to tell your insurance agent when you put your assets in a trust, LLC or other entity

large, well-lit house

Building wealth takes time, but losing it can happen in the blink of an eye. More and more people are choosing to protect their wealth by using asset protection trusts or limited liability corporations. Trusts are among the top 10 estate planning techniques, according to the American Academy of Estate Planning Attorneys. To accommodate for the rise in use of these among Americans, residence trusts or LLCs have been added to the definition of “insured” under our optional protection endorsement.

How you may be at risk

Consider this scenario: Bob and Sue own a primary home and a secondary home they use as a vacation house. Both homes are paid for and have been deeded in their individual names. Recently, while meeting with a financial planner, the suggestion was made to create a trust and deed both homes in the name of the trust. They moved forward with making the change and within a few weeks the papers were signed and both homes now have ownership under the Bob and Sue Family Trust. Neither Bob nor Sue thought to call their insurance agent; these aren’t new homes, and the exposure hadn’t changed, so they assumed no action was needed. Several months later, a fire started in the dryer in the laundry of their secondary home. The claim was fairly large. The agent discovered the change in homeownership while the claim was being processed by the insurance carrier. The Bob and Sue Family Trust is not an insured under their policy. It looks as if coverage may be denied. Now what?

How Nationwide® Private Client responds

Listing a trust or LLC as the named insured (policyholder) may potentially limit coverage for the individuals who reside in the property. For instance, the policyholder receives worldwide liability coverage, whereas additional insureds receive premises-only liability for ownership, maintenance and use of the residence premises. To respond to such needs, Nationwide Private Client makes the following options available to help ensure proper coverage for you as well as the personal trusts and/or LLCs having ownership in a residence.

Option 1: Add our protection endorsement to your policy so that trusts and LLCs owned by you, with a financial interest in the residence premises, will automatically be included as an insured for dwelling, other structures and personal liability for the residence premises.1

Option 2: Add the trust or LLC to the policy through an “additional insured” endorsement. This will allow for the proper worldwide coverage for the policyholder and proper location-centric coverage for the trust or LLC.

Why it’s important for you

It’s important to prepare for the unexpected. Talk to your insurance agent about whether or not you are adequately protected if you have put your assets in a trust, LLC or other entity.

Nationwide Private Client offers these added benefits:

  • Automatic coverage for your trust or LLC under our protection endorsement.
  • Adding our protection endorsement to your homeowners policy not only addresses trusts and LLCs, it also provides additional value-added coverage to help protect your household, your assets and your reputation.
  • Specialized claims service: Our team of problem-solvers is available 24 hours a day, 365 days a year.
  • Nationwide, a Fortune 1002 company, is one of the largest and strongest diversified insurance and financial services organizations in the U.S. and is rated A1 by Moody’s and A+ by both AM Best and Standard & Poor’s.3
  • At Nationwide, we strongly believe in being good corporate citizens where we work and live. Since 2000, the Nationwide Foundation has committed more than $588 million to charitable organizations across the United States.

Why Nationwide Private Client

Your drive to build the life of your dreams inspires us. That’s why we provide crafted coverage and specialized service to keep pace with your changing needs and a rapidly evolving world.

[1] Limited to the residence liability/limited to the premises.
[2] Based on revenue, Fortune magazine (June 2, 2021).
[3] Ratings affirmed 5/27/20 by Moody’s, 12/1/2022 by AM Best and 4/19/2022 by Standard & Poor’s.