Can the cost of an estate trustee's liability insurance premium be paid out of the estate?

Generally, yes — the cost of appropriate liability or indemnity insurance for an estate trustee can be treated as a proper expense of administering the estate, provided it's a reasonable cost genuinely tied to protecting the estate and its proper administration, rather than something unrelated to the trustee's actual duties. This is consistent with the broader principle that reasonable costs of properly running the estate are paid out of estate funds.

Whether a specific premium is treated as reasonable can depend on factors like the size and complexity of the estate, the level of risk involved in administering it, and whether the coverage is proportionate to that risk rather than excessive. Like other expenses, this is something that gets reviewed as part of a passing of accounts if a beneficiary questions it, so a trustee paying for this kind of coverage should be prepared to explain why it was a reasonable and necessary cost given the specific estate.

Because reasonableness is assessed against the actual estate rather than a fixed rule, a trustee considering this kind of coverage should discuss with their lawyer or accountant whether the specific policy and premium being considered are proportionate before simply charging it to the estate.