Trustee Liability Insurance

We offer trustee liability insurance to trustees, guardians of the estate (including conservators), and receivers. Trustee liability insurance is a type of errors and omissions (E&O) insurance, also known as professional liability insurance. A trustee legally holds assets for the benefit of another person, the beneficiary. Trustees purchase liability insurance to protect themselves as the manager or administrator of a trust against claims brought by beneficiaries, creditors, and others. Also included in this class of insurance are guardians of the estate, including conservators, and receivers.

Trustees have a duty to act in good faith and to invest the assets prudently. Trustees are often responsible for decisions regarding the investment of assets and for the accounting, filing of tax returns, compliance with trust terms, and compliance with laws. Guardians of the estate (including conservators) are appointed by the court to manage the assets of a person of unsound mind, such as an incapacitated adult or a minor child. A receiver is the person appointed to protect and manage a business or entity. A common situation for a receivership is in connection with the bankruptcy of a business.

We have access to various insurance companies and can provide liability coverage for all types of trusts, including the following:

As the personal assets of trustees may be at risk, it is vital for trustees to consider obtaining trustee liability insurance.

What coverage is provided by trustee liability insurance?

Trustee liability insurance is usually provided under a professional liability insurance policy, also called errors and omissions insurance. The typical policy provides coverage for acts, errors and omissions of the trustee in the performance of trustee services. The policy is designed to protect the assets of the trustee and do not directly protect the trust assets. The most common policy limit is $1 million per claim and $1 million aggregate, but lower and higher limits are usually available.

It is important to point out that the coverage is provided under a claims made basis, which means that only the acts, errors and omissions of the trustee occurring on or after the retroactive date are subject to coverage under the policy. The retroactive date is usually the inception date of the initial policy. This means that when the coverage is initially purchased, the prior acts of the trustee are not covered. Also, it is the policy that is in force at the time a claim is reported that handles that claim. When the trust is closed, the trustee will need to purchase "tail" coverage in order to get coverage for claims the may be reported at a later date.

Give us a call to discuss your trustee liability insurance needs.