Separate insurance policy for firearms owned by your NFA trust?

[Speedgelb986S]

Just curious to know how many of you who have set up an NFA trust have purchased a separate insurance policy in the trust's name for fire, theft, or other loss? I would be more than hesitant to submit an insurance claim for firearms owned by the trust on an insurance policy that I personally own... That could be construed as either (1) an admission that I considered those firearms to belong to me, personally, and not the trust, or (2) attempted insurance fraud, if I am submitting a claim for losses to me, personally, that I, personally, did not sustain.

A separate insurance policy owned by the trust, with the trust itself as the named beneficiary, would obviously solve the problem, assuming that you can get your insurance provider to sell the trust such a policy. I was just wondering whether those of you who have set up trusts to hold your NFA items have considered the question, and if so, how you have chosen to address it?

 

[JoshuaW]

Something I guess I need to bring up with my insurance agent...

What I am assuming they will say is that if it is in the house or car, it is covered. Having assets in a trust isnt a complete rarity, but better safe than sorry.

 

[Dobber]

My form isn't back yet but I had planned on putting the new item on my own personal "Other Valuables" policy that already insures other firearms that I keep in my home. I think if I had to submit a claim I would submit it on the grounds that the damage occurred while in my possession: even if I am not the legal owner. My policy is an extension of my home-owners policy which I carry through USAA. It is my understanding that following loss it is commonplace to insure items for their replacement value based on the event/location/circumstance rather than by ownership.

Case in point: If I take my Mom's laptop home for a week to clean it up because she clicks on bouncing monkeys AND my house burns down my insurance policy will replace that laptop.

In the same way as the laptop I'm safely storing/operating/administrating the property of a trust, a real legal entity, and the replacement value of the item(s) is my responsibility should anything happen to the property.

This is my take.

-Dobber

 

[CountryBoy19]

If you're talking about a rider on your existing homeowner's policy I see no reason to get a separate policy. You own the trust, the trust owns the things in the trust so ultimately the things in the trust are still yours until you die. You have the right it get insurance on things you own, even if the items are held in trust. I would say, "No, you don't have to get a separate policy"... but then again, I'm the non-comformist that wrote the check for my tax stamps out of my personal check-book for items going into my trust... IMHO, I don't think it can be questioned who owns the items as long as they get transferred into the trust properly.

 

[Speedgelb986S]

If you're talking about a rider on your existing homeowner's policy I see no reason to get a separate policy. You own the trust, the trust owns the things in the trust so ultimately the things in the trust are still yours until you die.. You have the right it get insurance on things you own, even if the items are held in trust. I would say, "No, you don't have to get a separate policy"... but then again, I'm the non-comformist that wrote the check for my tax stamps out of my personal check-book for items going into my trust... IMHO, I don't think it can be questioned who owns the items as long as they get transferred into the trust properly.

No, the trust is a separate legal fiction. I don't "own" it. No one does. It's not like a corporation, which has shares, and owners of those shares. The trust exists on its own, it doesn't have any "owners." It merely has trustees, which can change if the trust is amended; a trust res (the guns themselves); and beneficiaries to the trust, which, again, can change if the trust is amended.

It seems to me it would be quite a risk to take the position that I should be covered if an NFA firearm--owned by an NFA trust, but merely in my custody as the trustee of that trust--were stolen, since I don't own that item, the trust does. Definitely not a bet I'd be willing to take if the item in the trust were, say, a $20,000 M-16, given that the insurance company will obviously look for any reason they could possibly come up with to deny paying out on that claim...

That may ultimately be the answer, though, now that I think about it... Perhaps the insurance company could add a rider to my homeowners' insurance to cover me against a claim by the trust against me as trustee, for losses to the trust property (i.e. a stolen gun) while that property is in my custody as trustee for the trust.

 

[JoshuaW]

I have to give USAA a call tomorrow about my fence being obliterated in that storm a week ago, so I will be sure to ask about this. The way they have explained things to me in the past was that if it is in the house (or car, since they do my auto as well) it is covered. It doesnt matter if it is someone else's property. I asked specifically about electronics. Now if you have ANY expensive items, my plan is $10k in any given "category", then you should have a rider. So, if you have a $20k M16 you probably should have talked to your insurance company before hand, whether it is in a trust or personally owned.

 

[CountryBoy19]

No, the trust is a separate legal fiction. I don't "own" it. No one does. It's not like a corporation, which has shares, and owners of those shares. The trust exists on its own, it doesn't have any "owners." It merely has trustees, which can change if the trust is amended; a trust res (the guns themselves); and beneficiaries to the trust, which, again, can change if the trust is amended.

It seems to me it would be quite a risk to take the position that I should be covered if an NFA firearm--owned by an NFA trust, but merely in my custody as the trustee of that trust--were stolen, since I don't own that item, the trust does. Definitely not a bet I'd be willing to take if the item in the trust were, say, a $20,000 M-16, given that the insurance company will obviously look for any reason they could possibly come up with to deny paying out on that claim...

That may ultimately be the answer, though, now that I think about it... Perhaps the insurance company could add a rider to my homeowners' insurance to cover me against a claim by the trust against me as trustee, for losses to the trust property (i.e. a stolen gun) while that property is in my custody as trustee for the trust.

Own may not be the right word to use, but you control and use it as if you own it. You, personally can take out an insurance policy on anything you want to even if you don't own it AFAIK. I still see no reason why you can't keep it all in the same insurance. I know many people that have placed everything they own into a trust as part of their estate planning. They still buy insurance on their house etc as an individual. I think people are making a mountain out of a mole hill on this but that's just my opinion.

 

[Speedgelb986S]

I have to give USAA a call tomorrow about my fence being obliterated in that storm a week ago, so I will be sure to ask about this. The way they have explained things to me in the past was that if it is in the house (or car, since they do my auto as well) it is covered. It doesnt matter if it is someone else's property. I asked specifically about electronics. Now if you have ANY expensive items, my plan is $10k in any given "category", then you should have a rider. So, if you have a $20k M16 you probably should have talked to your insurance company before hand, whether it is in a trust or personally owned.

Let us know what they say. I don't have a $20k M16, or even a trust, yet. But I am careful by nature, and I like to plan ahead. Since I'm sure that there are members of this forum who DO have expensive NFA items in a trust, I figured this would probably be a good place to ask what others have done. (...and I thought it might not be a bad idea to ask the question, at least, in case it hadn't occurred to some of the members who have NFA items in trusts.)

 

[Speedgelb986S]

... You, personally can take out an insurance policy on anything you want to even if you don't own it AFAIK. ...

And that's true, but if the item has real value--say, over $10k as noted above--it just makes sense to have the conversation with one's insurance agent from the get-go. Remember, if the insurance company can find a reason to deny a large claim, they will. Every time.

Several years ago, a friend let me borrow his motorcycle for the summer, so long as I took out the insurance policy on it and paid the premiums. I was able to get it done, but I had to fill out a few extra forms with my insurance company to explain why I wanted insurance on a vehicle that I didn't own. I can easily see similar issues arising in the case of a firearm that is owned not by me, but by a trust of which I am a trustee.

 

[mrchaucer]

Just to add to this a bit as a property insurance adjuster...most homeowner's policies only offer limited coverage to firearms. By limited I mean the standard amount is $2,500, if you're real lucky, it's $5,000. After that...no coverage. A great reason to have your firearms insured separately. Especially in an NFA trust. I'd call your insurance agent and ask him to give you a quote on insuring your firearms on a separate policy. I have mine insured through my NFA trust under an Inland Marine policy. This keeps me covered for theft, etc even when travelling around the U.S. Also, if I 'loan' a firearm out to a trustee of my trust, it's covered as well. Insurance on firearms is not cheap, but worth it. I know many people have 10's of thousands of dollars tied up in firearms and firearm related items. Just my two cents on this one gentlemen!