Know How The Liability Insurance Works In Favor Of The Executors

Executor liability insurance ensures the originator of any company or organization personal liability defense costs. The insurance is available for estate, estate trustees, administrator, clients etc. An individual who is selected as an executor can be held personally liable for certain decisions they make during the period of execution. In such case having a liability insurance proves to be very helpful for the executor. The insurance saves the executors estate against possible risks and legal expenses.

The area of conflict, which is likely to arise, is nepotism with regards beneficiary decisions, loss of entitlement, sale of property, and diminished value of chattels due to wrong financial planning. Conflicting issues arising with regards interest of the executor, wrong valuations and financial decisions resulting in loss from beneficiary’s interest.


Now executor liability insurance works for the betterment of the executor by providing specific protection to executors for the mistakes they make or likely to make during the administration of the organisation or company. The policy covers the following risks & policy provision–

  •        Negligence in administration of estate
  •        Defense cost
  •        Limit of the term policy on which the claim is made
  •        Three year term cover to deal with estate assets
  •        Monetary coverage primarily with regards legal expenses and indemnity cost
  •        No deductions
  •        Coverage which are equivalent to assets values around $ 500 million or more

Certain kinds of exclusions and limitations are there in the policy which the policy holder must be informed prior to making of the policy in order to help the executor make an apt plan or decision with regards the policy for practical reasons. The briefs of limitations and exclusions are as follows-


Territory, certain coverage applies to the territory, foreign assets. The jurisdiction plays a vital role. For instance a case of claim is brought before the court; and the court has no jurisdiction as with regards the territory mentioned in the claim or otherwise; then the case cannot be entertained. So before making a claim or policy taking territorial jurisdiction in the scenario is important.


Limitations are included with regards the total value of assets, which are different with regards different estate and the country or town of the policy executor. For instance at some places the laws provides that if the assets outside the estate are more than 15-20% then the policy limits are reduced to 15% less as per the limit of liability stated in the policy etc.

The same applies in the case of business assets with regards share, if the share in private business is more than 20% then the same shall be reduced in policy limit.

Suppose executor is providing extra services in return for compensation of some kind to its employees or workers outside then in such case there shall be certain exclusions involved as per the policy terms which may differ according to the case. Tax liability is not covered as tax is mandatory for every state to be paid. The policy also does not cover the following:-

  •        Third party liability
  •        Damage

Conclusion: Executor liability insurance is essential for any estate holder.