[WSBAPT] USAA Insurance - qualified if moved to trust?

[Nick Pleasants]

Brent,
Once the owner dies, there is arguably coverage during the probate process. E.g., State Farm’s policy says “If any person shown in the Declarations or the spouse, if a resident of the same household, dies: (a) we insure the legal representative of the deceased. This condition applies only with respect to the premises and the property of the deceased covered under this policy at the time of death; (b) insured includes: (1) any member of your household who is an insured at the time of your death, but only while a resident of the residence premises; and (2) with respect to your property, the person having proper temporary custody of the property until appointment and qualification of a legal representative.” Strope-Robinson v. State Farm Fire & Cas. Co., 844 Fed.Appx. 929 (8th Circuit, 2021). However, once the property is transferred per the Will, coverage is arguably destroyed. The holding in Strope-Robinson was: the property insurance issued by State Farm was a personal contract between the deceased and did not run with the property after it was conveyed to plaintiff under the transfer on death deed. It was a big deal when this opinion first came out as estate planners questioned the use of Transfer on Death Deeds in conjunction with insurance, and best practice became adding the recipient of the TODD as a named insured.
In your case, the Trust needs to be a named insured on the policy. I would push the client to contact USAA, and if not, fire the client. You don’t want to get dragged into the lapse of coverage issue.
Best,
Nick

Nicholas Pleasants | Shareholder

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From: wsbapt-bounces at lists.wsbarppt.com <wsbapt-bounces at lists.wsbarppt.com> On Behalf Of Brent Williams-Ruth
Sent: Tuesday, August 15, 2023 9:43 AM
To: WSBA Probate & Trust Listserv <WSBAPT at lists.wsbarppt.com>
Subject: [WSBAPT] USAA Insurance - qualified if moved to trust?

Greetings Listmates -

I have a decedent who had qualified to be a customer of USAA. She has passed and part of her estate plan is holding her home in trust for a designate time/purpose.  Her Trustee has advised that homeowners insurance is through USAA and they are worried that if they contact to advise that the home will be moved into this testamentary trust that they would not qualify for continued coverage.

Has anyone ever worked with USAA in a similar situation? My former insurance coverage hat (never for USAA though) would lean toward finding out and behind upfront now vs paying premiums only to have a loss that is not covered in the future.

Appreciate any thoughts or experience with USAA.

Brent

Brent Williams-Ruth (pronouns: he/him)
Attorney-At-Law

Law Offices of Brent Williams-Ruth, a division of BWR Consulting, PLLC

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