Q: "I insure a real estate developer. He created two trusts for his kids, and one of the trusts owns some of the properties. Thus, the trusts are named insureds on the policy. One of the trusts purchased a home in Dallas where the client’s daughter will live. They have asked about adding the house to the policy and the daughter purchasing an HO-4.
Is there any coverage for a dwelling under an HO-3 that a commercial property policy would not include? Are you aware of any articles or other resources that address this issue?"
A: “Personal lines policies simply aren’t equipped for properties owned by nonhumans. Except for personal trusts, ISO’s eligibility rules don’t allow issuing an HO policy to a nonhuman entity.
I’ve never compared commercial policies like a BOP to a personal package like an HO policy. One thing that comes to mind regarding the HO form is additional living expense. A local attorney just drafted new wills, powers of attorney and the like for my wife and me. He hates the movement to trusts and LLCs and thinks it complicates things just to give the illusion of lesser liability or save a few bucks in different ways.
Here are some Big ‘I’ Virtual University (VU) articles on trusts:
And check out these VU articles on dwellings owned by LLCs and corporations:
Bill Wilson is director of the Big “I” Virtual University.
This question was originally submitted by an agent through the VU’s Ask an Expert Service. Answers to other coverage questions are available on the VU website. If you need help accessing the website, email logon@iiaba.net to request login information.
