The document discusses conservation defense insurance, which provides land trusts coverage for legal costs associated with defending land conservation easements or fee lands. It is important because most land trusts do not have adequate funds set aside for litigation expenses, which are growing risks as population increases. Conservation defense insurance insulates land trusts from draining endowments to pay legal fees, gives financial certainty, and demonstrates commitment to permanence required by the IRS and land trust standards. It works through a "captive" insurance model where land trusts pay annual premiums of $60 per property into a fund managed by a committee to pay legal claims up to $500,000. The program provides coverage for litigation defense, enforcement of rights, and appeals.

1. Land Trust Alliance
Conservation Defense Insurance Program:
An Essential Stewardship Tool
Barbara L. Hopkins, JD, ASLA
Executive Director
NeighborSpace of Baltimore County
May 15, 2012

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3. Robin Hill Park
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4. Overview
• WHAT is Conservation Defense Insurance?
• WHY is It Important and WHY Now?
• Benefits of Conservation Defense Insurance
• What is Behind the Current Push to Create a Conservation Defense
Insurance Program?
• Federal Law
• Land Trust Standards & Practices
• Risk
• Lack of appropriate insurance in the commercial market
• HOW Does It work?
• Purpose
• “Captive” Insurance Explained
• Structure
• Terms
• Feasibility
• Where Can You Get More Information?
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5. What?
• WHAT is Conservation Defense Insurance?
• A creative and cost-effective way for land trusts to ensure that land
conservation stands the test of time.
• The equitable transfer of a risk of loss (owing to legal costs associated
with a violation or legal challenge) from a land trust to an insurance
company (Terrafirma, Inc.) in exchange for payment of a premium.
“Great deeds are usually wrought at great risks.” Herodotus
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6. Why?
• WHY is Conservation Defense Insurance Important? Provides
Certain Benefits ….
• Insulates your land trust from draining your endowments to pay legal fees
• Gives your land trust financial certainty about your exposure to litigation
costs
• Builds confidence with donors, lenders, regulators and legislators in your
ability to uphold conservation permanently
• Demonstrates to the IRS that land trusts are serious about their
responsibilities to defend easements in perpetuity
• Makes available professional help and prevention programs
• Controls litigation, costs and service providers
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7. Why?
• WHY is Conservation Defense Insurance Important? Addresses
Current Challenges Related to …
o Federal Law and Policy:
 Land trusts must have the commitment to protect the conservation
purposes of a donation and the resources to enforce the restrictions; 1
 No need to set aside funds.2
 However, LTA says the IRS is:
 Applying greater scrutiny to question of resources available for
monitoring, enforcement & defense;
 Considering a requirement that these be documented on 990.
“Out of the 1,667 land trusts in the country, only 19 (1 percent) have a separate legal defense fund
of $70,000 or more, and fewer than 320 land trusts (19 percent) have any other monitoring,
stewardship or defense-related endowments sufficient to support a trial.” 3
126 CFR Section 1.170A-14(c)
2 Ibid.
3 Land Trust Alliance, Land Trust Alliance, Conservation Defense Insurance: Federal Law Requirements, p. 1. (Available at 7
http://www.landtrustalliance.org/conserve/conservation-defense/conservation-defense-insurance/program-documents)

8. Why?
• WHY is Conservation Defense Insurance Important? Addresses
Current Challenges Related to:
o The Standards and Practices, Which Require that We
 Estimate the long-term costs of stewardship
 Secure those funds before closing or have a plan for raising them4
o We promise to follow the Standards and Practices as guiding principles
as members of LTA.
Costs to consider with easements: Costs to consider with fee properties:
(1) Baseline documentation; (1) Start-up costs (dedication ceremony, surveys, entrance signs,
(2) Annual monitoring; brochures, maps);
(3) Maintaining ongoing (2) Annual costs (monitoring, maintenance, administrative activities,
landowner relationships; property taxes, insurance); and
and (3) Costs associated with capital expenses and capital replacement 6
(4) Enforcement to correct “The costs associated with fee properties are often higher because
violations.5 of the greater responsibilities associated with fee land ownership.”
4Land Trust Alliance, The Land Trust Standards and Practices Guidebook: An Operating Manual for Land Trusts, Standard 11(Conservation Easement
Stewardship), Practice 11 A and Standard 12 (Fee Land Stewardship), Practice 12 A (2006).
5 Doscher et.al., Determining Stewardship Costs and Raising and Managing Dedicated Funds, pp. 21, 183-200 (Land Trust Alliance, 2007) 8
6 Ibid.

9. Why?
• WHY is Conservation Defense Insurance Important? Addresses
Current Challenges Related to …
o Growing Risk:
 Projected population growth of 100 million by 2050 and corresponding
land value escalations raise the risk that landowners will challenge
easements in court.
 Most easements will change hands in the next 30 yrs and research shows
violations rise when transfers occur.
 Litigation cost estimates in 2008 were at least $50,000 for a trial, $35,000
for summary judgment motions and $50,000 for an appeal. There is no
insurance available for these expenses that is effective, affordable and
reliable.
 There is little case law, so court decisions over the next few years will
affect the long-term usefulness of easements as a conservation tool. An
unfavorable precedent in one jurisdiction could have disastrous
consequences for everyone.
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10. How?
• HOW Does It Work? “Captive” Insurance Explained
Business entity staffed by LTA to :
• Perform all functions not delegated to
Members Committee;
• Provide marketing and loss prevention
services; Business entity hired to:
• Staff the Members & Claims Committees. • Manage day-to-day
operation of the insurance
company (Terrafirma).
• Collect premiums, pays
claims, perform
accounting and auditing
functions, attend to
regulatory requirements.
Managed by a “Members Committee”
• Approves policies & strategic direction;
• Provides oversight of functions of operations, budgets ($400,000 annually) and
legal compliance;
• Members are initially appointed, serve 3 yr terms; subsequently elected; 10
• Delegates legal strategy to a Claims Committee.

11. How?
• HOW Does It Work? Terms
o Cost: $60/year/easement or fee-owned parcel; some discounts
available
o $5,000 deductible/claim; maximum limit of $500,000 per claim
o No coinsurance
What’s Included:
1. Defense against litigation re: conservation easements and fee-owned land;
2. Enforcement of legal rights by conservation easement holders and fee-land owners when those
respective rights are violated;
3. Fees for alternative dispute resolution, such as mediation fees, court filing fees, negotiation fees and the
like for both defense and enforcement coverage, as well as fees for outside experts; and
4. Any appeals up to the policy limits.7
7Land Trust Alliance, Conservation Defense Initiative: Final Terms and Conditions (June 8, 2009), p. 10-11 (Available at
http://www.landtrustalliance.org/conserve/conservation-defense/conservation-defense-insurance/documents/alliance-conservation-defense-insurance- 11
program-terms-and-conditions.pdf)

12. How?
• HOW Does It Work? Terms
What’s Excluded:
1. Condemnation and actions arising out of condemnation (eminent domain);
2. Any government enforcement action against a land trust for an alleged violation of statute, regulations,
common law (including if applicable any fiduciary or other obligations under state law, if any) or other codes);
3. Any and all IRS audits, investigations or other inquires of any type for both landowners and land trusts.;
4. All tax related matters;
5. Criminal matters;
6. Actual damages or corrective work undertaken on the ground;
7. Business disputes unrelated to the defense or enforcement of a conservation easement or fee-owned land;
8. Anything covered by general liability;
9. Any other claim covered by other commercial insurance such as directors and officers
liability insurance;
10. Pending or prior litigation and pre-existing known violations, disputes or trespass;
11. Trespass by the land trust or other willful or grossly negligent acts or omissions;
12. Court costs and any other costs related to a court action by the insured seeking to
extinguish or amend any insured conservation interests;
13. Staff costs and related expenses for staff or volunteers.8
8Ibid.
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13. How?
• HOW Does It Work? Eligibility
To participate, a land trust must be able to answer the following questions affirmatively:
1. Is the land trust legally organized and in good standing in that state?
2. Is the land trust tax exempt under IRC § 501(c)(3)?
3. Does the land trust have a complete baseline documentation report for every conservation easement?
4. If the land trust is insuring fee properties, does it have a complete inventory for every parcel of fee-owned land?
5. Does the land trust implement a program for annual monitoring of its conservation easements?
6. If the land trust is insuring its fee properties, does the land trust regularly monitor its fee owned land?
7. Is the land trust a member in good standing of the Land Trust Alliance?
8. Is the land trust free of any final judgment against it for fraud, misrepresentation, criminal charges, bad faith,
misleading business practices or any other similar charges?
9. Is the land trust free from an on-going governmental investigation or inquiry, such as an attorney general
investigation, legislative hearing and the like, the subject of which is land trust complicity in misleading business
practices, fraud, gross negligence or criminal misconduct?
10. Is the land trust operating at breakeven or does it have a plan to reach breakeven?
11. Does the land trust have general liability insurance? (no D&O requirement)
12. Does the land trust have and implement a written records policy and secure record keeping system that preserves
irreplaceable documents essential to defense and enforcement?
13. Is the land trust actively building its legal defense and general stewardship reserves or other reserves that can be
allocated for legal defense and stewardship, unless prohibited by state statute or regulation?9
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9Ibid.

14. How?
• HOW Does It Work? Feasibility
o LTA is awaiting IRS determination of non-profit status for Terrafirma, Inc.
o LTA has raised $5.25 million of the $5.50 million needed to fully
capitalize Terrafirma, Inc.
o Written commitments are in hand from 467 land trusts willing to insure
more than 18,544 conservation easements; need 16,000 insured
properties to meet budget requirements.
o Projected 2013 start.
For more information:
• Consult Leslie Ratley-Beach, Conservation Defense Director, 802-262-6051, lrbeach@lta.org
• Contact Barbara Hopkins, Atlantic Cost Representative to the Members Committee of Terrafirma, Inc., 443-610-
8601, barbara@neighborspacebaltimorecounty.org
• Visit the LTA Website: http://www.landtrustalliance.org/conservation/conservation-defense/conservation-defense-
insurance/conservation-defense-insurance
• For additional copies of this presentation, please visit: www.neighborspacebaltimorecounty.org/page25.html
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