In February 2021, the 8th Circuit Court of Appeals issued a ruling that impacts anyone with a Transfer on Death Deed, better known as a TODD. In the case of Strope-Robinson v. State Farm Fire & Casualty Company, David Strope owned a home in northern Minnesota. State Farm had issued a homeowner’s insurance contract to David for the home. He was terminally ill, and executed a TODD naming his niece, Dawn Strope-Robinson, as the beneficiary on August 10, 2017. The TODD was recorded the following day, and Strope died on August 14, 2017. Six days following his death, Strope’s ex-wife intentionally set the house on fire, damaging the home and the personal property inside.

Strope-Robinson was appointed personal representative of the Estate, and she proceeded to file a claim with State Farm for the damage to the house, as well as the personal property inside. State Farm granted her claim for the loss of the personal property, but denied coverage for the home stating that the real estate (pursuant to the TODD) immediately transferred upon the death of the insured and Strope-Robinson was not named in the policy. The district court ruled with State Farm, meaning there was no insurance coverage for the home at the time of the fire and thus, no compensation.

Strope-Robinson appealed to the 8th Circuit arguing that the district court should not have sided with State Farm because they should consider Minnesota’s statutes on TODDs, the insurance contract, and her equitable concerns. The appeals court rejected this argument after reviewing the statutes, including the opinion in Closuit v. Mitby, which states that, “… policies of insurance do not attach to or run with the property insured… [and] [i]n case of conveyance or assignment of the property, they do not go with it as an incident thereto…”.

The ruling implies that if you want to ensure that the beneficiary of your TODD receives interest in your property, one of the two must occur: 1) The beneficiary of your TODD must be named as insured on your homeowner’s insurance; or 2) The beneficiary must acquire their own homeowner’s insurance covering the property named in the TODD immediately after the interest of the house is transferred to them (upon the death of the owners). Failure to do so and on the occasion of a catastrophic event (like in this case), or even a slip and fall, the beneficiary of the of the TODD will find themselves without any insurance coverage.