Placing property in a trust is a strategic move for both estate planning and asset protection. Whether it’s a residential home or a commercial property, holding real estate in a trust helps manage ownership, protect beneficiaries, and avoid probate. However, one critical detail that property owners often overlook is ensuring that the insurance policy correctly names the trust as the insured party.

Failing to update the insurance policy after transferring property into a trust can lead to major complications, including coverage denials, legal disputes, and financial loss. That’s why it’s essential to ensure that the trust is properly listed as the named insured on all property insurance policies.

Why Should the Trust Be the Named Insured?

When a property is placed into a trust, legal ownership shifts from an individual or business entity to the trust itself. However, if the insurance policy still lists the previous owner as the insured party, it can create several problems:

1. Claim Denials – Insurance companies may refuse to pay claims if the named insured no longer has ownership rights. If a fire, natural disaster, or liability issue occurs, this can result in out-of-pocket expenses for repairs, legal costs, or settlements.
2. Coverage Gaps – Some policies may not extend full coverage to properties held in a trust unless the trust is explicitly named as an insured party. This could leave critical exposures unprotected.
3. Legal and Financial Confusion – If a claim is filed but the trust is not properly named on the policy, trustees and beneficiaries may face significant legal hurdles in proving ownership or accessing claim benefits.
4. Commercial Property Risks – For businesses, properties held in a trust may have even more at stake. Commercial real estate often carries higher liability risks, tenant obligations, and business interruption concerns. If the trust isn’t properly listed on the insurance policy, a claim dispute could result in costly legal battles and operational disruptions.

Steps to Ensure Proper Coverage

To avoid these risks and ensure full protection for both residential and commercial properties, property owners should:

✔️ Review the Existing Policy – Check the current insurance policy to see who is listed as the named insured. If the trust is not mentioned, action is needed.

✔️ Contact the Insurance Provider – Inform the insurer that the property has been placed in a trust and request that the trust be added as the named insured or an additional insured.

✔️ Provide Trust Documentation – Most insurers will require a copy of the trust agreement or relevant documents to verify ownership and ensure compliance.

✔️ Work with a Knowledgeable Insurance Agent – Trusts can be complex, and not all insurance providers handle them the same way. Partnering with an agent experienced in insuring trust-owned properties ensures the right coverage is in place.

Get the Right Coverage with Morning Star Agency Insurance Services

Ensuring that your residential and commercial properties are properly insured within a trust is essential for asset protection and risk management. At Morning Star Agency Insurance Services, we specialize in helping property owners navigate the complexities of trust-owned insurance policies.

Contact us today at (866) 546-5598 to review your current policy and make sure your trust-held properties have the right protection!

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Research indicates that millions of U.S. households own insurance policies that are seriously out-of-date. As a result, the following questions should be asked. If the answer to one or more of these questions is yes, then you should contact your insurance agent as soon as possible so your insurance policies can be appropriately updated.

• Has your house undergone major renovations or improvements? If so, your home may be underinsured.

• Has your marital status changed? If you have married, for example, you may now qualify for a multi-car discount on your auto insurance.

• Have you purchased new valuables or collectibles? If so, you may be seriously underinsured for these items. Specialty policies or endorsements can properly cover them.

• Are you now participating in a carpool? If so, your exposure to injuring passengers has grown and your liability limits may need to be increased.

• Are you now retired? If so, your auto insurance premium will likely drop since your annual mileage should decrease.

• Have you added a burglar alarm with central station reporting for your home? If so, you could qualify for a homeowner’s premium discount.

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6 HOME RENOVATIONS THAT CAN AFFECT YOUR INSURANCE

If you’re planning a home renovation, you may want to call your insurance agent first because this decision can impact your homeowners insurance. Some home renovations will change the amount of coverage you need, while others could even help you qualify for a discount. We cover six common scenarios that could affect your insurance, so you can plan ahead.

1. Building a New Addition

When you expand and improve your home, you could likely increase its replacement value. This is the cost to repair or rebuild your home. Some additions that could increase your replacement value include: adding a second-story bedroom, expanding the living room or building a new garage.

After building a new addition, or making updates or other improvements, you may need to increase your coverage because the value of your home, and the cost to rebuild it will likely have increased. Most insurance companies require your Coverage A or dwelling coverage limit be at least 80 percent of the replacement value of your home.

Your insurance agent can recalculate your home value to determine whether you’ll need more coverage because of the addition or improvement.

2. Building a Pool

If you’re looking to add a pool, you will want to contact your insurance agent to review coverage for changes to your property’s value, as well as any increase in risk. When people are swimming and running around the pool, there’s the chance for an accident. If someone gets hurt, they could try to hold you responsible for damages. This can apply even if the accident isn’t your fault.

Check with your agent to see whether your existing policy covers a pool and if you need to increase your liability coverage. This coverage can help pay damages to injured persons and provide for a defense if you are sued as a result of their injuries.

You should also ask your agent what steps you can take to keep your pool safe so you can avoid accidents. Adding a fence with a lock is a smart move. You could also add lights with motion sensors or a pool alarm to discourage trespassers. Consider skipping the diving board, because this increases the chance of an accident and your insurance cost.

3. Adding a Deck

A new deck is another improvement that can add value but also risk, especially if the deck is attached to a second story or higher. You should let your agent know that you’ve added a deck, so he or she can adjust your policy as necessary.

4. Renovating the Kitchen

Upgrading the kitchen can significantly increase the value of your home, especially if you switch to higher-quality counter tops, appliances and new flooring. You should contact your agent to see if you need to increase your insurance coverage.

If your contractor upgrades the plumbing or electrical wiring as part of the renovation, ask your homeowners insurance agent if you qualify for a discount or if your coverage needs to be adjusted. These upgrades can reduce the chance of flooding water damage and fire, so check if your insurance company has discounts that can help to reduce your premium.

5. Finishing the Basement

Finishing your basement can also increase the value of your home. That means, yet again, you may need more homeowners coverage. Flooding can be a concern, especially for the lowest floor in your house. It is important to note that most homeowners’ insurance policies do not cover damage caused by floods. Ask your agent to review your coverage and look to see if there are steps you can take to help prevent future damage, like installing a sump pump.

6. Redoing the Roof

Before you redo your roof, ask your insurance agent whether this could qualify for a discount. Some companies offer a discount when you reinforce the roof or use stronger roofing materials that are wind, hail and leak-resistant. Your agent can explain how to qualify. At the same time, redoing the roof could increase your property value, which means you might need more coverage.

It is a good idea to contact your agent when you’re considering making home renovations.  Give us a call here at Morning Star Agency Insurance Services at 949-833-2030 or email us at service@morningstarinsurance.com.  Our knowledge and expertise can help you get the most out of your discounts while making sure your home is adequately insured!

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Top 5 Reasons Why Consumers Should Use an Insurance Broker

Consumers generally think they benefit when they buy insurance direct, but is it true?

To find out, one group of researchers asked people what matters to them when buying insurance, and in turn the research panel used those criteria to evaluate the differences between buying insurance via a broker and buying direct online.

Why do consumers hate the middle man?

Primarily, customers perceive any middle man as an unnecessary third party, and conventional wisdom dictates that this means additional cost and possibly mistakes. Advertising by many insurers to ‘go direct’ has compounded this feeling.

What is important to consumers?

In order of importance, these are the things people said matter to them:

1. Cost
2. Ease
3. Speed
4. Peace of mind that everything is covered.
5. Security of personal data.

So let’s now analyze these items and let the research panel judge how each performs when insurance is bought directly or when through a broker.

1. Cost

Contrary to popular consumer belief the panel found that broker pricing was actually better than direct insurance pricing.

The reason for this seems to be principally due to insurers providing different rates to brokers, in order that premiums are lower. Why would insurers provide special broker pricing? Simple: because the risk is lower for the insurer. Brokers are professionally trained to choose the right policy for their customers, and not to under insure, therefore avoiding unnecessary claims while maintaining the correct premium income.

‘Cutting out the middle man’ it seems, does not save money this time. On the contrary!

2. Ease

Many of the consumers in the research panel’s test case were surprised here. At least half began their test with the impression that buying policies direct from the Carrier would be the easiest option for them. After trying both, almost all had changed their mind.

While the online experience usually proved more pleasant than the phone, most brokers offered an online service, and were far, far more pro-active after they received the initial quote request from the consumer, often answering queries by personal email or call and helping to reassure customers with a human service. Furthermore, most direct services completely fell down when queries or changes were required that were less common, particularly later in the policy life cycle. Brokers really shone through here.

3. Speed

The results here were quite evenly balanced. In the case of the time taken to generate initial quotation figures, direct services (online) were consistently very quick, while some brokers answered quote requests by personal follow up.

The difference however was somewhat reversed when it came to mid-term changes, documentation requests, and unique or difficult questions. The direct services often fell back to large call centers whose staff had little or no real insurance knowledge. In these areas brokers were more efficient, making suggestions the consumers found highly useful, saving them lots of time.

On balance, the speed at which quotes were produced by the direct services was not significant to the consumers when compared to the speed and efficiency with which brokers generally managed their policies throughout the policy life cycle.

4. Peace of mind that everything is covered

The research panel saw few surprises here. Brokers were largely far more efficient at cross checking policies than consumers, and also very good at educating their customers, explaining what types of coverage were available and answering questions.

Direct processes were better than in the past but put too much focus on the consumer to do this work himself/herself to be able to compete with the level of service provided by brokers.

The really good direct services centered on only covering the low risk policies, and leaving any consumer with non-standard requirements high and dry.

5. Security of personal data

This was a difficult one to test, and fell largely to the panel’s technical team. They did however take into account how consumers felt about their data security after using the various services.

In the case of Internet-based services, the direct services tended to follow security guidelines marginally better than broker services, mainly due to the size of the organizations involved and lack of good software on the part of some brokers

On the phone however, the researchers saw a different story. Brokers, being far better equipped to deal with specific insurance questions and used to a human discussion, gave people a stronger feeling that they were in safe hands. The process of securing personal data was much the same as with direct, but the trust conveyed by brokers was better.

As a side note, here at Morning Star Insurance Agency Insurance Services, we are dedicated to keeping your personal data secure by using the most sophisticated and up-to-date management information systems, so you can rest be assured your information is safe with us.

Summary of Results

So who won?  Broker or Direct?

1. [Broker]
2. [Broker!]
3. [Broker, though people admitted they were heavily biased due to point 2.]
4. Peace of mind that everything is covered. [Broker]
5. Security of personal data. [Broker]

Conclusion

We set out in this article to discuss the general perception by consumers that ‘going direct is better’, for the benefit of consumers and brokers on the whole.

While the research panel didn’t test every website and every class of insurance, the results with their test users were conclusive.

Conventional wisdom usually dictates that the middle man offers little to the discussion and always has his price.  But in the complex world of insurance, perhaps things are not so simple, and after seeing the results of the research panel, we are now more certain than ever that using an insurance broker today is more important than ever.

Our recommendation to you would be to trust us, Morning Star Agency Insurance Services, as your broker and let us shop for you, and find you the best possible coverage at the lowest price.  For a quick quote, please complete the information in the Quick Quote box at the top of the page, or give us a call at (949) 833-2030.  We’ll be more than happy to discuss your insurance needs and get you covered!

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Only 17% of California’s homeowners have Earthquake insurance.  Are the rest in denial–or making a rational choice?

Some financial planners suggest the latter. They say that the majority of California homeowners are opting out after weighing the relatively remote chance of a temblor destroying their homes against the high cost of today’s earthquake coverage.

But we don’t buy insurance coverage just to protect us from likely occurrences. We get insurance to guard against unlikely and financially devastating events.

That’s why we buy life insurance: Most of us don’t expect our families to need it. Not having coverage, however, could mean a financial nightmare for our families if the unlikely should happen and a breadwinner dies prematurely.

Of course, some people wouldn’t buy, say, auto liability coverage at all if it wasn’t required by law. Some would even forgo homeowners insurance if their mortgage lenders didn’t force them to buy it. Some people are more than willing to roll the dice–but they should be clear about the real stakes.

In the case of earthquake insurance, people who decided long ago to do without it might want to revisit the issue–especially in light of changes in the last year that have made coverage more appealing.

Earthquake insurance coverage changed radically after the 1994 Northridge temblor.

Until then, companies that wrote homeowners insurance in the state were also required to offer earthquake coverage. After Northridge, most insurers refused to write either, saying the $12.5 billion in insurance claims from the quake was far higher than expected–higher, in fact, than the total of all earthquake insurance premiums ever collected in California.

The state Legislature eventually responded by created the California Earthquake Authority (CEA), a state-run insurance pool.

The first policies were bare bones. Instead of 5% or 10% deductibles, the CEA policies required homeowners to pay 15%. That meant that a homeowner insured for $300,000 had to pay the first $45,000 for repairs before coverage kicked in. The policies didn’t cover landscaping, pools or anything else outside the actual home.

Inside the home, earthquake coverage was spartan, covering just $5,000 of contents. Everything else that toppled over, wrenched apart or fell out of cabinets had to be replaced by the homeowner.

Oh, and you probably would have had to move in with relatives, unlike previous earthquake insurance policies, which covered rent and other living expenses for six months to a year while your home was being rebuilt.  CEA’s coverage paid just $1,500, which just about covered a month at a Motel 6.

To make matters worse, the coverage was often more expensive–sometimes much more expensive–than the more comprehensive private earthquake policies it replaced. CEA’s enabling legislation required the authority to base its rates on the latest scientific advancements in predicting earth movements, and the scientists discovered that some areas once presumed safe–portions of San Bernardino and Riverside, for example–were actually riskier than previously thought.

But the state finally responded to homeowners’ complaints by offering more earthquake insurance options through CEA, including lower deductibles and greater contents coverage, for somewhat higher premiums.  Other private carriers also began to offer more comprehensive earthquake policies.

CEA now says demand for its enhanced policies is greater than anticipated: Nearly 34,000 homeowners have purchased the additional coverage in the first year it became available, compared with 917,000 who have the bare-bones CEA policies.

That still leaves nearly five out of six homeowners with no quake coverage, however.

Some people are wealthy enough to be able to walk away from the financial investment of a home, of course, and others have so little equity at stake that protecting it from earthquake damage may not make much sense.

But if your reasons for not having earthquake insurance include any of the following, you may want to rethink your stance:

* “My home survived the earthquake just fine.”
For anyone who knows anything about quakes, this is perhaps the silliest of all rationalizations.

Each earthquake is as individual as a fingerprint, with motion traveling through the ground in unique ways. In addition, new fault lines are being discovered all the time. The earthquake created by the fault under Northridge may not have touched your bungalow, but a shifting fault elsewhere in the Los Angeles area could leave it in splinters.

* “My home is bolted to its foundation.”
This is a better argument than most; some respected earthquake researchers are themselves spending money on earthquake retrofitting rather than paying for insurance coverage.

But even they will admit that no amount of retrofitting can protect against a truly devastating shaker. Bolting seems to work best for one-story wood-frame homes; homes that are two or more stories or have big picture windows or other large gaps in the frames, are likely to suffer more damage even if bolted.

* “I’ll get FEMA money to rebuild.”
Affected homeowners may qualify for low-interest loans offered by the Federal Emergency Management Agency through the Small Business Administration. But these loans are not free money; homeowners are obligated to pay them back, and they are entered in your personal net worth statement as a liability, offsetting an equal amount of assets.

Some observers question how much money will be available after the next major earthquake; numerous disasters have soured many congressional lawmakers on the idea of handing cash to people who have previously declined earthquake insurance coverage.

* “I’ll just hand over the keys to the bank.”
Homeowners who let their banks foreclose on earthquake-devastated homes not only lose all their equity, but also put their credit rating at risk. Depending on lenders’ reactions, it may be difficult or impossible to borrow money for another home for several years.

For many of us, our homes represent our largest financial asset. We should think carefully before considering walking away as an option.

Of course, even people who do have insurance will probably suffer some loss of equity in a quake-hit area, at least temporarily. Just ask anyone who tried to sell a home in Northridge in the mid-1990s. A few intrepid souls snapped up these “distressed” properties, reasoning that the chances of another quake hitting the same area were especially remote, but many potential buyers stayed away.

Facing a temporary loss of equity is one thing; it’s quite another to suffer such a huge loss from uninsured quake damage that you’re saddled with a 10- to 30-year rebuilding loan, or that you lose your equity entirely by foreclosure.

To summarize, a home is a very important investment that must be protected from losses of any kind.  Here in California, the likelihood of another major earthquake within the next 10-20 years is very high.  Most of the time, we manage to avoid catastrophe, but we should strongly consider taking precautions to protect against the unthinkable.  We have several carriers we work with to provide earthquake insurance to our clients & will work to find you the best coverage at the lowest possible price.  For a quick earthquake quote please complete the information in the Quick Quote box at the top of this page, or give us a call here at Morning Star Agency Insurance Services at (949) 833-2030 and speak with one of our licensed & experienced agents!

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