Trustees Professional Liability Insurance
Trustees are held to a high fiduciary standard which makes them vulnerable to attack from disgruntled beneficiaries who scrutinize and critique their every move.
In recent years, appointing a trustee pursuant to a trust agreement has become an increasingly popular alternative to the standard ‘last will and testament’ supervised by probate court. Because trust-based planning is often intended for the privacy of the family estate, the perception of withholding communication or information from the beneficiaries often creates dissent, and in turn, legal recourse.
Many trustees who are handed the family or company reins are unaware that their corporate, accounting or lawyers liability insurance policy may not provide them with any coverage, leaving them uninsured and exposed to large potential losses, particularly in a volatile economy when depreciating assets may easily be tied to damages.
The trustee may also be left holding the bag when claims are asserted after the trust has been fully distributed, leaving the trustee without trust funds to defend himself, much less compensate himself for the additional trustee services that will be required (see claim example 2).
Sophisticated | Specified
A trustee’s duties are much more than a ‘miscellaneous profession’. Trustees are sophisticated professionals with specific legal exposures, inherent to their business; and their errors and omissions policy should reflect just that.
A Trustees Professional Liability Insurance is a sophisticated and specific insurance product essential for anyone acting as a trustee.
A Trustees Professional Liability protects trustees handling a variety of trusts including:
- living trusts
- beneficiary trusts
- family trusts
- testamentary trusts
- liquidating trusts (see claim example 8)
- charitable trusts (see claim example 7)
- special needs trusts
- pooled trusts
- estate guardianship agreements
- conservatorship agreements.
Why NAPLIA uses Hiscox Trustee Professional Liability?
- Exceptional customer service from specialist underwriters that understand the legal exposures of a trustee
- Comprehensive coverage
- Underwriting flexibility
- Proactive problem-solving philosophy
- Competitive premium and retentions
- Responsive claims management
- Free risk management and loss prevention services consisting of initial consultation and up to one hour of legal services
- Lloyds of London capacity, which carries an A.M. Best rating of A (Excellent)*.
What is covered
- Professional liability for trustees
- Policy language tailored to the specific coverage needs of trustees and the exposures therein, including discretionary investment authority (see claim example 1), negligent delegation (see claim example 3)and tax preparation (see claim example 4)
- Appointment of defense counsel that specializes in trustee litigation
- Spousal and domestic partner coverage extensions (see claim example 5)
- Coverage for insured trustees that are also trust beneficiaries whereby a suit is brought against another insured trustee (see claim example 6)
- Punitive damages up to the full limit of liability (where insurable by law)
- Final adjudication language for fraud claims
- Coverage extended to employees of the trustee (paralegal, clerical)
- 50% retention credit for claims settled in formal mediation
- Personal injury offenses.
- • Up to $10,000,000 capacity
- • Duty to defend policy
- • $5,000 minimum premium
- • $5,000 minimum retention.