Trustee Liability Insurance

Our insurance agency offers trustee liability insurance for all types of trusts in multiple states. Tustee liability insurance is provided through a professional liability insurance policy, also called errors and omissions (E&O) insurance, that is designed for trustees. The coverage is designed to protect trustees against allegations of negligence in the performance of their work.

We operate in the following states: Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Louisiana, Maine, Maryland, Michigan, Minnesota, Missouri, Nebraska, Nevada, New Jersey, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, Tennessee, Texas, Utah, Vermont, Washington, Wisconsin, Wyoming.

Why do trustees need insurance?

Trustees are responsible for managing trust assets and making distributions in accordance with the trust document and all applicable laws. Trustees owe a fiduciary responsibility to the beneficiaries to protect the trust assets and to act in good faith. Even if they follow all the rules, trustees are still exposed to potential litigation from beneficiaries who may decide that they are unhappy with the trustee's actions. Trustees can also make mistakes that result in asset impairment.

The personal assets of trustees are fully exposed if they are sued for any reason. It is therefore adviseable for trustees to obtain trustee liability insurance in order to protect themselves. The proper timing to obtain trustee liability insurance is right before a trustee starts his or her work as prior acts are typically not covered by insurance.

What is covered under trustee liability insurance?

Trustee liability insurance is provided though a professional liability policy which designed for trustees. The policy provides coverage for defense and damages up the the selected policy limit. The coverage is provided under a claims made form which means that it's the policy that is in force at the time a claim is reported that responds to such claim.

Trustees should be aware of the retroactive date, which is typically the inception date of the first policy that is purchased. Any act, error or omission committed by the trustee prior to the retroactive date will not be covered. Also, when a trustee has completed his or her work, "tail" coverage will need to be purchased in order to provide coverage for claims that may be reported after the policy is canceled or non-renewed. The tail coverage is provided through an endorsement to the last policy that was purchased and is for a fixed duration.

How is the premium determined?

The most important factors that are used to determine the premium for trustee liability insurance are the amount of assets in the trust, the policy limits, and whether the trustee is also a beneficiary. Premiums can generally be paid by the trust as an administration expense.

Please call us if you have any questions about trustee liability insurance.