Trustee Liability Coverage
Individuals who serve as trustees may face substantial personal liability. Trustees are often called upon during tumultuous times to handle challenging accounting, financial and other managerial responsibilities as well as serving as referee for family disputes. Few individuals have prior experience or training in providing trustee professional services, yet they are tasked with making decisions in the best interest of the beneficiaries, in accordance with the trust and in compliance with the law.
This can lead to any number of contentious situations. Allegations against trustees can take many forms, including mismanagement of trust assets, failure to diversify assets, accounting errors, unfair or improper distributions, failure to follow terms of the trust agreement and conflicts of interest.
The Private Trust Consortium worked closely with Brown & Brown, Inc., the world’s 6th largest, publicly traded general insurance agency to provide a policy which is underwritten and issued by Chubb Insurance Group, the largest property and casualty insurance company in the world. This policy is owned by the trust, and it protects the trust from claims for reimbursement of legal fees and costs made by individual trustees accused of negligence or breach of fiduciary duty, and it protects the trust from losses resulting from the individual trustee’s negligence or breach of fiduciary duty. At the same time, the individual trustee is named as an insured. The policy is designed so the trust can pay the premium. This can be a powerful inducement for the individual who has been asked to serve as trustee. Importantly, this coverage can usually be underwritten and bound within 48 hours.
Trustees’ Professional Liability coverage is afforded to natural persons in their individual capacities as trustees, and it is available to individual trustees even if they are not being compensated for their services as trustee. Chubb’s Professional Liability insurance for Trustees coverage is tailored to the unique exposures of trustees overseeing a variety of trusts, including:
- Testamentary trusts
- Living trusts (when the grantor is not the trustee)
- Liquidating trusts
- Bankruptcy trusts
- Claims/insurance trusts
If you have questions about this coverage or if you want to discuss your current coverage and your options with a qualified agent, please call Brown & Brown at 615-620-7718 or email them at GRP-PTCinsurance@bbins.com.