July 14, 2011 by Suzanne Sharma
The Economical Insurance Group (TEIG) in Waterloo, Ont. has worked with two Kitchener, Ont. brokers for the last two years to develop a new product, ERAssure, which protects clients who become an executor or trustee of a will and fear being sued by dissatisfied heirs.
“Myron Neufeld and Scot Dalton of Estate Risk Protection Plan Inc. identified a conspicuous gap in the personal insurance protection marketplace,” said Katherine Kipper, vice president of marketing and communications at TEIG. “[We] recognized this underwriting opportunity created by the convergence of changing family dynamics, tremendous inter-generational transfers of wealth and heightened standards of accountability for estate executors brought about as a result of the Internet and access to information.”
This niche product covers claims for damage and defense costs related to errors or omissions made in the course of estate administration performed by the “occasional executor” – the family member or trusted family friend who is appointed as executor to an estate.
This individual typically has little formal training or experience for some or all of the tasks related to the executor’s role but has significant personal liability that is not insured within common insurance policy forms, stated Kipper.
Policy limits as high as $5 million are available subject to underwriting, and the major policy exclusions include fraud, failure to pay tax amounts owing, losses arising out of failure to insure assets, and associated professional liability for executors that also provide concurrent professional services to the estate.
Mark Weintraub, practice chair of the estate and trust litigation department at BC-based Clark, Wilson LLP, applauded the developers of this product because there may be some demand.
“Those persons who are appointed under will or other instrument or by court order (“administrators”) may indeed by interested in coverage for negligent performance of duties,” Weintraub told Canadian Insurance Top Broker July 14.
While Weintraub couldn’t comment on how many cases he’s seen where an heir sues a trustee, he did state there are several reasons why people hold back from filing a lawsuit, including the high cost of litigation. Additionally, history has proven that Canadian courts tend to be more lenient towards the will executor because it is difficult to prove negligence, he said.
Despite that, he said ERAssure is still an interesting and potentially useful product development.
“I would certainly consider recommending it under the right file conditions and depending upon the cost and scope of the policy,” he said.
Weintraub added if the new product becomes more widely used, estate planners would likely raise the issue with clients to determine whether they wish a clause in a will authorizing this type of insurance.
More information on ERAssure can be found by clicking here.
This story was originally published by Canadian Insurance Top Broker.