What is Executor Liability Insurance?

ERAssure® executor liability insurance is now available for the estate and your executor, estate trustee, or estate administrator clients. It insures them for personal liability and defense costs should they face litigation regarding decisions they make in the course of administering the estate, which concurrently exposes the estate to potential legal expense.

Conflicts with beneficiaries generally involve errors – or the perception of errors – in any or all of the following areas in the administration of an estate:

  1. Preferential or prejudicial treatment of certain beneficiaries resulting in a loss of entitlement by another beneficiary.
  2. Timing issues related to the sale of real property or various types of financial instruments that results in diminished value of the asset.
  3. Allegation of conflict of interest on the part of the executor
    whether or not the executor is also a beneficiary.
  4. Failure to valuate or improper valuation of assets.

What does ERAssure provide?

ERAssure provides specific protection to executors for errors that they make in the administration of an estate.

The ERAssure policy insures the following risks:

  1. Liability arising out of negligent administration of an estate.
  2. Defense costs associated with defending an action based on such negligence, whether actual or alleged.

ERAssure policy provisions include:

  • Claims-made liability coverage with a single occurrence and aggregate limit applicable over the term of the policy.
  • 3-year term that will cover the typical time frame required by most executors to deal with the assets of the estate.
  • First dollar coverage for legal expenses and indemnity without deductible.
  • Coverage limits that are similar to estate asset values with a minimum coverage limit of $500 thousand and a maximum coverage limit of $5 million.

Are there limitations or exclusions to ERAssure coverage?

Awareness of the following exclusions and special limitations will be helpful in developing a plan with your client for activity that will reduce exposure to the estate and executor, and contain the risks to insurable areas, wherever possible or practicable. The following is a summary; please download the Important Coverage Information PDF for more complete information and examples.

  1. Territory
    The coverage territory is Canada. Coverage also applies for foreign assets provided the claim is brought in a Canadian court and the action is judged on its merits based on Canadian law, not the foreign jurisdiction.
  2. Limitations
    • Foreign Assets: if the foreign assets (outside Canada) of the estate are more than 15% of the total value of the estate, the policy limit is reduced to the lesser of $100,000 or 15% of the limit of liability stated in the policy for claims arising out of such foreign assets.
    • Business Assets: If the shares in a private business comprise more than 15% of the overall value of the estate, the policy limit is reduced to 15% of the limit of liability stated in the policy for claims arising out of such business assets.
  3. Exclusion Highlights
    • Claims arising out of the executor providing professional services for compensation (including mortgage brokers, insurance brokers or agents, financial advisors, solicitors or public accountants) to the estate, concurrent with being an executor.
    • Tax liabilities are not covered by the policy. Amounts due as tax owed in any respect are obligated to be paid out of the proceeds of the estate.
    • Failure to arrange and maintain direct damage and third party liability insurance on the estate assets is not covered by the policy.
    • Fraud, dishonesty, and malicious acts or activities are excluded from coverage under the policy.

What does ERAssure cost?

ERAssure premiums depend on the estimated value and complexity of the estate, type of assets, number and qualification of executors, and the amount of coverage. For a typical estate valued at less than $1 million, the approximate cost would be $2,500 for a 3-year term.

How are ERAssure claims processed?

When a claim is made or circumstances arise that could reasonably be expected to result in a claim, the policyholder notifies ERAssure. An ERAssure Insurance Service Consultant will contact the policyholder for more information and will determine the appropriate action, whether it is further investigation or recommended legal response.

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Connecting your clients with the protection of ERAssure is simple. Call 1-855-636-3777 or obtain your password for the secure ERAssure website.