Lawyer and Trustee? Your Liability Insurance May Not Be Enough
Trust attorneys often act as trustees, using their specialized expertise to navigate legal and financial matters associated with trusts. As a lawyer, you have liability insurance, but it may not safeguard you in your role as a trustee. Knowing the dangers you face and the available protections can help you get the coverage you need.
Why Do Trustees Need Insurance?
As a lawyer, you wear many hats, one of which may be a trustee for clients. As a fiduciary, you’re charged with managing the trust property in a responsible and productive manner, with an obligation to act solely for the benefit of the beneficiaries. But while you’re looking after clients’ trusts, who is looking out for you?
As a trustee, you have personal liability when handling a trust. Even if you are indemnified, you aren’t protected from claims like gross negligence or intentional misconduct. When performing duties correctly, certain allegations could disallow indemnification.
If you act as an independent trustee, you lack coverage from a trust company, and your existing liability insurance may not protect the actions you take as a trustee.
In the case of a lawsuit, you could face extensive costs, including:
- Attorney fees
- Court costs
- Settlement costs
- Damages
- Time off work
Without insurance, you’ll pay all of these costs out of pocket. In the United States, costs paid into the tort system exceed $500 billion annually. The high cost of lawsuits means it’s best to have protection in case one happens to you.
What Is Professional Liability Protection?
As a lawyer, you have professional liability insurance (aka professional indemnity insurance) in place, so you assume you’re covered. Professional liability insurance was designed specifically for professionals who provide advice to their clients — similar to errors and omissions (E&O), as it protects professionals against claims arising from financial harm caused by their advice or services.
But consider this: chances are, professional malpractice insurance for lawyers doesn’t cover personal liability as a trustee. How, then, do you protect yourself while you’re protecting your clients’ trusts?
What Type of Insurance Can Provide Protection?
What if you’re accused of mismanaging the trust? You need a professional liability solution that includes trustee liability insurance. This solution helps protect your assets in lawsuits involving everything from errors to negligence. It may help cover costs like:
- Attorney fees and court expenses
- Settlements and judgments
- Negligence or improper management claims
- Mistakes like recordkeeping errors
For lawyers, professional liability solutions should include trustee protection if they regularly take this role. With insurance, you’ll gain coverage up to policy limits in the event of a covered claim, giving you added peace of mind as you care for your clients’ trusts.
How Much Does Trustee E&O Insurance Cost?
With trustee insurance, various factors may influence the cost, including the trust details, value, and beneficiaries. It may also depend on your particular experience as a trustee.
Your best option is to get a quote, which will account for some of your personal details to give you an accurate estimate of what you might pay. And remember that the cost of insurance is much lower than the legal expenses you could incur without it.
Get Customized Professional Liability Insurance Solutions!
Professional liability insurance for lawyers and trustees can help provide the level of protection you need, as long as you work with the right partner. XINSURANCE specializes in finding customized solutions to help cover the gaps in your current policies.
Don’t delay, get a quote from XINSURANCE — because your professional liability insurance simply may not be enough.
Authored by Rick J. Lindsey, President, Chairman, and CEO of XINSURANCE
Rick J. Lindsey hails from Salt Lake City, Utah. He began working in the mailroom of his father’s Salt Lake City insurance firm, getting his introduction to the business that became his lifelong career. Rick J. Lindsey quickly rose through the ranks while working in nearly every imaginable insurance industry job. As an entrepreneur, specialty lines underwriter, claims specialist, risk manager, and a licensed surplus lines broker, Rick J. Lindsey is highly skilled in all levels of leadership and execution. As he progressed on his career path, Rick J. Lindsey discovered an urgent need for insurers willing to write policies for high-risk individuals and businesses. He was frequently frustrated that he could not provide the liability protection these entities desperately needed to safeguard their assets. He also formed the belief that insurance companies acted too quickly to settle frivolous claims. Rick J. Lindsey decided to try a different approach. He started an insurance company and became the newly formed entity’s CEO. This opportunity has enabled Rick J. Lindsey to fill a void in the market and provide a valuable service to businesses, individuals, and insurance agents who write high-risk business. XINSURANCE also specializes in helping individuals and businesses who live a lifestyle or participate in activities that make them difficult for traditional carriers to insure. If you’ve been denied, non-renewed, or canceled coverage, don’t give up quite yet. Chances are XINSURANCE can help.