At this year’s Elder Law Institute, Chris Smith and Joe Weiler called attention to an unpublished court of appeals case that should prompt a reminder to your clients who are personal representatives and successor trustees to call the insurance agent after an individual’s death.
In Thompson v Fremont Ins Co, No 337368 (Mich Ct App Apr 10, 2018) (unpublished), Floyd Jude was living in a home that was transferred into a trust. Floyd had purchased an insurance policy on the home from Fremont but did not indicate that the home was owned by the trust. The insurance policy designated Floyd as the insured.
Floyd eventually died, and after his death, the personal representative of his estate paid the renewal policy premium with a check from Floyd’s bank account. A couple months later, Floyd’s nephew fell through stairs at the house and was injured. Subsequently, Fremont learned of Floyd’s death and cancelled the policy. Approximately a year later, the nephew recovered money from the trust and the trust looked to Fremont for the amount paid to the nephew. According to the court of appeals, Fremont had no obligation to reimburse the trust as the trust was not the insured on its policy. And because Floyd was deceased when the policy was renewed, the policy was not valid.
Thompson indicates that personal representatives and successor trustees who continue to pay premiums for insurance may not be covered when something bad happens on the property after the individual’s death. This case does not address whether Fremont would have been obligated to pay the claim if Jude were still alive. Smith and Weiler recommend giving a CYA instruction to clients to contact their homeowners insurance company whenever they place an asset in trust.