HO 06 15–TRUST ENDORSEMENT

(July 2020)

Regardless of the reason for establishing a trust (such as easing property transfers, handling property with multiple owners, delaying impact of tax assessments, wish to maintain privacy and many others), the problem that a trust presents is that a base HO policy’s wording may not be appropriate to provide coverage. The use of the HO 06 15 form is one method for clarifying how coverage applies. It does so by identifying the various insurable interests. The form modifies a base coverage form’s Definitions, Exclusions and Conditions sections.

SCHEDULE

This area is for listing the:

· Name and address of the trust (only for sake of reference)

· Name and address of all persons designated as trustees (trust beneficiaries) and the name of the trust

Note: As is the case with every ISO form that uses a schedule, this information may appear in other areas such as on the declarations or supplemental declarations. A designation of a trust as an insured applies only if it is permitted by applicable state law.

Definitions

The form adds trust and trustees (as indicated in the schedule) to the definition of insured. Insured status only applies to loss involving the trust property insured under the applicable, amended HO policy.

The expanded definition allows Coverages A and B to apply to a trustee or to the listed trust. In order to apply the other parts of the policy’s coverage properly, Coverages C, D, E and F apply to the party(ies) identified in the Schedule. The trust would not (likely) own the personal property furnishing the home, nor would it be exposed to loss of use or have direct need of liability and medical payments protection.

The liability portion of the policy is adjusted to handle liability for trustees who are not regular occupants of the insured home. In such instances, “bodily injury” and “property damage” liability is covered only when a loss or claim has a direct connection with the residence premises. Further, there is no coverage for an off-premise trustee’s household.

Example: Trustee A arranged a HO 00 03 policy on his home that is held in a trust and the policy is modified by the HO 06 15–Trust Endorsement. Trustee A lives in the home held by the trust.

Trustee A plays on a softball team. During a game, Trustee A accidentally hits another player while swinging a bat in a dugout. The liability for Trustee A would be covered by the policy that protects the trust residence.

The form substitutes its own definitions for “business” and “insured location.” “Business” is defined more broadly to include an exception for activities related to performing duties for the trust that is insured under the form.

Note: The latest edition of this form has modified the business definition to also refer to home-sharing host activities.

The form changes the definition of “insured location” to apply to the residence that is the subject of the trust. The modified wording permits the policy to provide coverage comparable to a home owned by a natural person; therefore, use of related premises, vacant land (but NOT farm land), incidental occupancies of non-owned premises, cemetery plots, burial vaults and areas rented to parties identified in the endorsement also qualify as insured locations. Land used for business purpose is not eligible as an insured location.

Exclusions

This portion of the policy is altered by the HO 06 15 so, in essence, there is no “bodily injury” or “property damage” liability protection for situations that involve the trustee’s professional liability. The exclusion’s purpose is to limit coverage to exposures that are personal in nature. The exclusion section is also modified to bar liability coverage for bodily injury suffered by either the trustee or any party identified in the endorsement Schedule. The exclusion extends even to indirect claims for bodily injury damage recovery.

Example: Barri Bukledown is the trustee of a home held in the name of the Bukledown Family Trust. Barri also lives in the home. The home is being renovated. Barri is working with the Olde-Home Remodellers Corp. to have the home’s kitchen modernized. Barri is checking out some cabinetry work when the heavy oak cabinets detach from the wall and crash down on her. The surgical and hospital expenses are paid by the owners of Olde-Home, who didn’t properly attach the new cabinets. Olde-Home’s insurer then files suit to recover the damages from Barri’s policy. Barri’s policy does not respond to the suit since the bodily injury was to the policy’s “trustee” and is excluded.

Conditions and Other Provisions

The form obligates the insurer to send any notice of termination to the trust. The insured and/or trust have the obligations of promptly notifying the insurer of (or complying with an insurer’s requests regarding) any changes of status in the trust including impairment or death of the applicable trustee. Finally, if Personal Injury applies under the amended policy, that coverage does not apply to such injury suffered by named trusts or trustees; nor to any claim or lawsuit requesting reimbursement or expense sharing by other parties that arise out of a personal injury suffered by an insured.