Delaware2025Passed Legislature
SB354
Limits Liability for Banks and Intermediaries Holding Insurance Money
Last scannedAug 24, 2026, 10:01 AM
In one sentence
This bill states that banks and securities intermediaries are not liable if they receive insurance money while acting only as a custodian or trustee, but the actual investor can still be asked to return it.
What it does
- Clarifies that banks and securities intermediaries do not have liability for receiving policy proceeds when acting solely in an administrative, trustee, or custodial role.
- Allows lawsuits against investors who receive benefits from insurance contracts made without a proper insurable interest.
- States that this protection applies only to legal actions started on or after the date the law becomes effective.
Who it affects
- Securities intermediaries defined under Delaware state code
- Banks acting as trustees, custodians, or administrators for others
- Investors who receive benefits from invalid insurance contracts
Limits and unknowns
- The law only applies to lawsuits filed after the bill is officially enacted into law.
- It does not protect investors who receive benefits from invalid contracts; they can still be sued to return the money.
- The text defines liability for intermediaries but does not specify how courts will determine if an intermediary was acting solely in a custodial capacity.
Plain language
Terms to know
- Insurable interest
- A legal requirement that the person buying an insurance policy must have a financial reason to want the insured person or thing to stay safe.
- Securities intermediary
- An organization, such as a broker-dealer, defined by Delaware law that holds securities for customers and acts on their behalf in transactions.
Official record
Sources
Official summary
AN ACT TO AMEND TITLE 18 OF THE DELAWARE CODE RELATING TO INSURANCE AND FINANCIAL INTERMEDIARIES