Conservatorship and Insurance Claims: Managing a Claim When There Is No Power of Attorney

When a policyholder suffers a stroke, a traumatic brain injury, advanced dementia, or any other condition that renders them unable to manage their own affairs, the insurance claim does not pause. The damage still needs to be documented. The insurer’s deadlines still run. Contractors still need direction. And the carrier’s adjuster is still calling — except now, no one has legal authority to answer.

If the policyholder had the foresight to execute a durable power of attorney before becoming incapacitated, an agent can step into the policyholder’s shoes and manage the claim. But when no power of attorney exists — and this is far more common than people realize — the family is left in a legal gap. The policyholder cannot act, and no one else has been authorized to act on their behalf.

The solution, in most cases, is a conservatorship. It is a court-supervised arrangement in which a judge appoints a responsible person (the “conservator”) to manage the incapacitated person’s (the “conservatee’s”) financial affairs, personal care, or both. In the insurance context, the conservator becomes the person who files the claim, provides documentation, negotiates with the adjuster, and — with appropriate court approval — settles.

This article explains how the conservatorship process works in California, what authority the conservator has over insurance matters, what court approvals are required, and — critically — how to protect the claim during the weeks or months it takes to get a conservator appointed.

When Conservatorship Becomes Necessary

A conservatorship is needed when all three of the following conditions exist:

1. The policyholder lacks the mental capacity to manage their own financial and legal affairs — they cannot understand the nature of their insurance claim, cannot provide informed consent to a settlement, and cannot direct their own representatives.
2. No valid, pre-existing durable power of attorney exists that grants someone the authority to manage insurance and financial matters on the policyholder’s behalf.
3. There is no other legal mechanism — such as a fully funded revocable living trust with an active successor trustee — that already grants someone the necessary authority.

The scenarios that give rise to this situation include:

• An elderly policyholder with advancing dementia or Alzheimer’s disease who never executed estate planning documents
• A policyholder who suffered a stroke or traumatic brain injury and is now in a long-term care facility
• A policyholder in a medically induced coma after an accident or medical emergency
• A younger adult with a severe mental health crisis that has rendered them unable to manage their affairs
• A policyholder with a developmental disability who has reached adulthood but cannot independently manage financial and legal matters

In each of these situations, the policyholder may have a valid insurance claim — the house was damaged by fire, a pipe burst while they were in the hospital, a wildfire destroyed the property — but no one has the legal authority to prosecute the claim. The family member who is physically present, who is dealing with the contractors and fielding the adjuster’s calls, may have no legal standing whatsoever. And the insurer knows it.

Types of Conservatorship in California

California law provides several types of conservatorship, each designed for different circumstances. Understanding which type applies is essential because the conservator’s authority — including authority over insurance claims — depends on the type of conservatorship and the specific powers granted by the court.

Probate Conservatorship (Probate Code §1800 et seq.)

This is the most common type and the one most relevant to insurance claims. A probate conservatorship is established when an adult cannot properly provide for their personal needs (food, clothing, shelter, health care) or cannot manage their own financial affairs. The petition is filed in the Superior Court under California Probate Code Section 1800 et seq., and the court appoints a conservator after a hearing.

A probate conservatorship can be:

• Conservatorship of the Person:Grants authority over the conservatee’s personal care — where they live, what medical treatment they receive, their daily care. This type alone does not grant authority to manage insurance claims.
• Conservatorship of the Estate:Grants authority over the conservatee’s financial and property matters — including managing real property, paying bills, collecting debts owed to the conservatee, and managing insurance claims. This is the type that gives authority over insurance matters.
• Conservatorship of Both Person and Estate: Grants the conservator authority over both personal care and financial matters. This is the most common appointment when the conservatee is significantly incapacitated.

LPS Conservatorship (Lanterman-Petris-Short Act)

An LPS conservatorship is established under Welfare and Institutions Code Section 5350 et seq. for individuals who are “gravely disabled” as a result of a mental health disorder. LPS conservatorships are initiated by the county public guardian or a treatment facility, not by family members. They are primarily concerned with involuntary mental health treatment, not financial management.

An LPS conservatorship, by itself, generally does not grant authority over the conservatee’s financial affairs or insurance claims. If a person under an LPS conservatorship also needs someone to manage their financial matters, a separate probate conservatorship of the estate must be established. The LPS conservator and the estate conservator may or may not be the same person.

Limited Conservatorship for Developmental Disabilities

A limited conservatorship (Probate Code §1801(d)) is designed for adults with developmental disabilities — intellectual disability, cerebral palsy, epilepsy, autism, and certain related conditions as defined by Welfare and Institutions Code Section 4512. Unlike a general conservatorship, a limited conservatorship removes only those specific rights that the conservatee cannot exercise, preserving as much autonomy as possible.

Whether a limited conservator has authority over insurance claims depends entirely on the specific powers granted in the court order. The court may grant the limited conservator authority to manage the conservatee’s financial affairs (including insurance claims), or it may not. The Letters of Conservatorship issued by the court will specify exactly which powers have been granted. When dealing with an insurer on behalf of a person under a limited conservatorship, the conservator must be prepared to show that the court order specifically grants authority over financial and insurance matters.

The Court Petition Process: Probate Code 1800 et seq.

Establishing a probate conservatorship is a formal legal proceeding that requires filing a petition with the Superior Court, providing notice to specified parties, and appearing at a hearing. The process is governed by California Probate Code Sections 1800 through 1898. Here is how it works in practice:

Step 1: Filing the Petition

Any interested person — typically a spouse, adult child, sibling, or other family member — may file a petition for conservatorship under Probate Code Section 1820. The petition must include:

• The proposed conservatee’s name, age, address, and a description of their incapacity
• The name and relationship of the proposed conservator
• Whether conservatorship of the person, the estate, or both is requested
• A description of the conservatee’s assets, including real property and insurance policies
• The names and addresses of the conservatee’s nearest relatives (Probate Code §1821)
• A capacity declaration from a licensed physician or psychologist (Probate Code §1823), or a declaration explaining why one cannot yet be obtained

Step 2: Notice and Investigation

After the petition is filed, the proposed conservatee must be personally served with a citation and a copy of the petition at least 15 days before the hearing (Probate Code §1824). Notice must also be mailed to the proposed conservatee’s spouse or domestic partner, relatives within the second degree, and any person who has requested special notice.

The court will appoint a court investigatorto interview the proposed conservatee, explain the nature of the proceeding, determine whether the proposed conservatee objects, and evaluate the need for a conservatorship (Probate Code §1826). The investigator files a report with the court before the hearing.

Step 3: The Hearing

At the hearing, the court determines whether the proposed conservatee lacks capacity and whether a conservatorship is the least restrictive alternative available. The proposed conservatee has the right to be present, to be represented by an attorney (the court will appoint one if necessary under Probate Code §1471), and to object.

If the court grants the petition, it issues Letters of Conservatorship— the official document that proves the conservator’s authority. These Letters are what the conservator will present to the insurance company, banks, and other institutions to establish their right to act on the conservatee’s behalf.

Step 4: Bond and Inventory

Before Letters of Conservatorship are issued, the court typically requires the conservator to post a surety bond(Probate Code §2320). The bond protects the conservatee’s assets by ensuring that a bonding company will cover any losses caused by the conservator’s mismanagement or malfeasance. Within 90 days of appointment, the conservator must also file an inventory and appraisal of the conservatee’s estate (Probate Code §2610).

The Conservator’s Authority to Manage Insurance Claims

Once a conservator of the estate is appointed and Letters of Conservatorship are issued, the conservator steps into the conservatee’s shoes for purposes of managing their financial and property affairs. Under Probate Code Section 2400, the conservator of the estate has the duty to take possession of, manage, and protect the conservatee’s assets. This authority specifically includes:

• Filing insurance claimson the conservatee’s behalf for damage to the conservatee’s property
• Providing sworn proof of loss and other documentation required by the insurance policy
• Granting access for inspections— permitting the insurer’s adjusters, engineers, and other experts to inspect the conservatee’s property
• Hiring professionals— retaining public adjusters, attorneys, contractors, engineers, and other experts to assist with the claim
• Negotiating with the insurer over coverage, scope of loss, and valuation
• Receiving insurance proceeds— collecting checks and directing payments into the conservatorship estate account
• Directing emergency repairsto mitigate further damage to the insured property (Probate Code §2401)
• Settling the claim— with court approval where required (see below)

The conservator’s authority is documented in the Letters of Conservatorship. When dealing with the insurance company, the conservator should present a certified copyof the Letters (not a photocopy) along with a certified copy of the court order granting conservatorship. Most insurers will also require a copy of the court order and may have their own internal process for “recognizing” the conservator on the claim file.

Court Approval Requirements for Settlements

One of the most significant differences between managing a claim as a conservator versus managing it under a power of attorney is the requirement for court approval of settlements. A conservator does not have unlimited authority to settle claims on behalf of the conservatee. California law imposes oversight requirements designed to protect the incapacitated person from having their claims settled for less than fair value.

When Court Approval Is Required

Under Probate Code Section 2505, a conservator must obtain court approval before compromising or settling any claim belonging to the conservatee’s estate. This includes insurance claims. The conservator files a petition for approval of the compromise, and the court evaluates whether the proposed settlement is reasonable and in the conservatee’s best interest.

The requirement applies to:

• Any settlement of a disputed insurance claim — where the insurer is paying less than the full amount demanded
• Any release or waiver of claims against the insurer
• Any settlement that includes a release of future claims or a waiver of additional policy benefits

In practice, this means that when the insurer makes a settlement offer, the conservator cannot simply accept it. The conservator must file a petition with the court, provide the court with enough information to evaluate the reasonableness of the settlement (including the nature of the claim, the insurer’s position, any expert opinions on value, and the conservator’s recommendation), and wait for the court to approve the compromise at a hearing.

When Court Approval May Not Be Required

Court approval is generally not required for:

• Undisputed payments:Receiving insurance proceeds that are not the product of a compromise or settlement — for example, an advance payment, a partial payment on an undisputed portion of the claim, or a payment that reflects the full amount owed for a particular coverage category
• Routine claim management:Filing the claim, providing documentation, granting access for inspections, and negotiating with the insurer are all within the conservator’s ordinary authority and do not require separate court approval
• Emergency repairs:Under Probate Code Section 2401, the conservator may take reasonable steps to preserve and protect the conservatee’s property without prior court approval, including authorizing emergency repairs to prevent further damage

Surety Bond Requirements and Insurance Proceeds

When a conservator of the estate is appointed, the court requires the conservator to post a surety bondin an amount determined by the court (Probate Code §2320). The bond is designed to protect the conservatee’s assets. If the conservator mismanages or misappropriates the conservatee’s assets, the bonding company pays for the loss, up to the amount of the bond.

How the Bond Amount Is Calculated

The bond amount is typically set at the total value of the conservatee’s personal property (including anticipated income for one year) plus the value of any real property that the conservator has the power to sell, convey, or encumber (Probate Code §2320(a)). When large insurance proceeds are received into the conservatorship estate, the total assets under the conservator’s control increase — and the bond may need to be increased to reflect the new, higher value.

For example, if the conservatorship estate initially consisted of a home valued at $600,000 and personal property worth $50,000, the bond might be set at $50,000 (covering the personal property and anticipated income). But if the insurer pays a $300,000 claim into the conservatorship account, the conservator now controls $350,000 in liquid assets. The conservator has an affirmative duty to petition the court to increase the bond, and the court may increase it on its own motion.

Bond Costs and Alternatives

The conservator does not pay the full bond amount out of pocket. Instead, the conservator pays an annual premium to a surety company, typically ranging from 0.5% to 1.5% of the bond amount. This premium is paid from the conservatorship estate (it is a legitimate expense of administration). However, for large estates, the premium can be significant.

In some cases, the court may waive or reduce the bond requirement if the conservator deposits the conservatee’s funds into a blocked account— a bank account that cannot be accessed without a court order (Probate Code §2328). This is a practical alternative when the conservatorship estate consists primarily of liquid assets, such as insurance proceeds, because the blocked account provides the same asset protection as the bond without the annual premium cost.

The Insurer’s Duty to Deal with a Properly Appointed Conservator

Once a conservator of the estate has been appointed and presents valid Letters of Conservatorship, the insurer has a legal obligation to recognize and deal with the conservator as the authorized representative of the policyholder. The conservator is the policyholder for purposes of the claim. The insurer cannot:

• Refuse to communicate with the conservator about the claim
• Refuse to provide claim documents, estimates, or coverage information to the conservator
• Insist on dealing directly with the incapacitated conservatee instead of the conservator
• Deny the claim solely on the basis that the “insured” is not the person presenting the claim
• Impose additional requirements or delays on the claim because a conservator is involved rather than the policyholder directly

Under the California Fair Claims Settlement Practices Regulations (California Code of Regulations, Title 10, Section 2695.1 et seq.), an insurer must deal fairly and in good faith with any claimant, which includes a conservator acting on behalf of the policyholder. The insurer must respond to communications, process the claim in accordance with statutory deadlines, and not use the conservatorship as a pretext for delay.

If the insurer delays or denies the claim because a conservator is managing it rather than the policyholder personally, this may constitute bad faith and a violation of the Fair Claims Settlement Practices Regulations. Where the policyholder is an elder or dependent adult, such conduct may also give rise to claims under the Elder Abuse Act.

Temporary Conservatorship: Emergency Situations When Property Is at Risk

Because the standard conservatorship process takes six to twelve weeks — and sometimes longer — California law provides a mechanism for emergency situations: the temporary conservatorship(Probate Code §2250). A temporary conservatorship can be granted on an expedited basis, typically within days of filing, when the court finds that the proposed conservatee’s person or estate will suffer immediate and irreparable harm without the appointment of a temporary conservator.

In the insurance claim context, a temporary conservatorship may be appropriate when:

• The insured property has been damaged and emergency repairs are needed to prevent further damage, but no one has authority to authorize the work
• The insurer’s proof-of-loss deadline or other policy deadline is approaching and the incapacitated policyholder cannot submit the required documentation
• The insurer is making a time-limited settlement offer that will expire before a permanent conservatorship can be established
• The insured property is at risk of further damage (for example, a roof is compromised and rain is forecast) and someone needs legal authority to contract for repairs
• The insurer is threatening to close the claim file due to lack of communication

How Temporary Conservatorship Works

The petition for temporary conservatorship is typically filed at the same time as the petition for permanent conservatorship. The petitioner must demonstrate to the court that there is an emergency — that waiting for the permanent hearing will result in harm to the conservatee or their estate. The court can hear the temporary petition on shortened notice (as little as five days under Probate Code §2250(e)) and can grant temporary Letters of Conservatorship that give the temporary conservator authority to act immediately.

However, the temporary conservator’s powers are more limited than those of a permanent conservator. The court will specify exactly what the temporary conservator is authorized to do, and those powers are typically restricted to what is necessary to address the emergency. For an insurance claim, the court might authorize the temporary conservator to:

• File the insurance claim and submit documentation to the insurer
• Authorize emergency repairs to protect the property from further damage
• Receive insurance advance payments for emergency expenses
• Communicate with the insurer regarding the claim

A temporary conservatorship expires when the permanent conservatorship is established or when the court orders it terminated, whichever occurs first. The temporary conservator should not expect to negotiate or settle the claim — those decisions will typically wait for the permanent conservator unless the court specifically grants that authority.

Practical Issues: Protecting the Claim While the Court Process Is Pending

The gap between when the policyholder becomes incapacitated and when the conservator is officially appointed is the most dangerous period for the insurance claim. The damage has occurred. The insurer’s clock is running. And no one yet has formal legal authority. Here is what families and their counsel should know about protecting the claim during this window.

Notify the Insurer Immediately

Even without a conservator in place, someone should notify the insurance company that a loss has occurred. This is not the same as filing a formal claim — it is putting the insurer on notice. The notification should be in writing and should state:

• The policyholder’s name and policy number
• The date and nature of the loss
• That the policyholder is incapacitated and unable to manage the claim personally
• That a conservatorship proceeding is being initiated and the family member anticipates being appointed conservator
• A request that the insurer preserve its right to accept the claim and not take any adverse action pending the conservatorship appointment

This notification does not bind the insurer or create legal obligations the way a formal claim would, but it creates a record that the insurer was informed of the loss promptly. If the insurer later tries to argue that the claim was untimely because the formal filing did not occur until after the conservator was appointed, this notification undermines that argument.

Mitigate the Damage

Every insurance policy requires the policyholder to take reasonable steps to prevent further damage to the property after a loss. This obligation does not pause because the policyholder is incapacitated. While the legal nuances of who has authority to authorize repairs can be complex, the practical reality is that someone needs to board up broken windows, tarp the roof, stop the water leak, and take the other emergency measures that prevent the damage from getting worse.

Family members who take these emergency actions are doing what any reasonable person would do to protect the property. They should document everything: take photographs before and after, keep receipts, and get written descriptions of the emergency work performed. These costs are generally recoverable under the policy’s emergency repair or mitigation provisions, and the conservator can submit them for reimbursement once appointed.

Document the Damage Thoroughly

Photographs, video, and written descriptions of the damage should be created as soon as possible after the loss, regardless of whether a conservator has been appointed. Evidence degrades over time. Repairs may obscure the original damage. Weather may make conditions worse. The person documenting the damage does not need to be the conservator — anyone can take photographs. What matters is that the documentation is thorough and is preserved for the conservator to use later.

Consult an Attorney Early

The family should consult both a conservatorship attorney (probate/estate planning law) and, separately, an attorney experienced in insurance bad faith litigation or a licensed Public Adjuster as early as possible. The conservatorship attorney handles the court proceeding. The insurance professional advises on how to protect the claim and positions the conservator to maximize the recovery once authority is established. These are two different skill sets, and both are needed.

When Conservatorship Intersects with Cognitive Decline

Many conservatorship cases in the insurance context involve elderly policyholders with progressive cognitive decline — dementia, Alzheimer’s disease, or other conditions that gradually erode the policyholder’s ability to manage their affairs. These cases present unique challenges:

• The loss may have been caused or worsened by the cognitive decline itself— a policyholder with dementia may have forgotten to turn off the stove, left a faucet running, or failed to maintain the property, leading to damage that might otherwise have been prevented.
• The insurer may argue the policyholder failed to mitigate— claiming that the policyholder should have taken steps to prevent further damage after the initial loss. This argument is particularly offensive when directed at someone who lacks the cognitive capacity to understand the loss has occurred.
• The policyholder may have signed documents they did not understand— if the insurer obtained a recorded statement, a proof of loss, or a settlement release from a policyholder whose cognitive capacity was impaired, the validity of those documents is subject to challenge.
• The timeline of incapacity becomes critical— the conservator and the insurer may disagree about when the policyholder lost capacity, which affects whether prior claim activity (including any prior settlements or releases) is valid.

When the Policyholder Dies During the Conservatorship

If the conservatee dies while the conservatorship is active and the insurance claim is still pending, the conservatorship terminates by operation of law (Probate Code §1860). The conservator’s authority ends, and the claim transfers to the probate estate. The executor or administrator of the decedent’s estate then takes over management of the insurance claim.

This transition requires prompt action:

• The former conservator should notify the insurer of the conservatee’s death and inform them that authority will be transitioning to the estate representative
• A probate proceeding must be initiated (if not already in progress) to appoint an executor or administrator
• The new estate representative should present their Letters Testamentary or Letters of Administration to the insurer as soon as they are issued
• Any pending court approval for settlement in the conservatorship case will need to be refiled in the probate proceeding

For more on how insurance claims are handled when the policyholder dies, see our article on what happens to insurance when the policyholder dies.

Special Considerations for Attorneys

Attorneys involved in conservatorship cases that include insurance claims should be aware of several issues that arise at the intersection of probate law and insurance law:

Conflict of Interest Screening

The conservator has a fiduciary duty to act in the conservatee’s best interest. If the conservator is also a beneficiary of the conservatee’s estate (for example, an adult child who stands to inherit the insured property), there is an inherent tension between the conservator’s duty to the conservatee and their personal financial interest. The court is aware of this tension, and it is one reason why court approval is required for settlements. Attorneys should ensure that any potential conflicts are disclosed to the court and that the settlement truly serves the conservatee’s interest, not just the conservator’s.

Fee Arrangements and Court Oversight

Attorney fees in a conservatorship case are subject to court approval (Probate Code §2640 et seq.). Similarly, public adjuster fees are an expense of the conservatorship estate and should be disclosed to the court. If the insurance claim is large and the professional fees are significant, the conservator should include fee arrangements in the petition for approval of the settlement so that the court can evaluate the net recovery to the conservatee’s estate.

Coordination Between Probate Counsel and Insurance Counsel

In complex cases, the conservatorship attorney and the insurance attorney (or bad faith litigation attorney) may be different people. Coordination between them is essential. The probate attorney ensures the conservator has proper legal authority and that all court requirements are met. The insurance attorney or public adjuster handles the substance of the claim. When settlements are reached, both need to coordinate on the petition for court approval to ensure the court has sufficient information to evaluate the reasonableness of the settlement.

Alternatives to Conservatorship

Conservatorship is a significant legal proceeding — it is expensive (attorney fees, court costs, bond premiums, and ongoing reporting requirements), time-consuming, and involves a judicial finding that the conservatee lacks capacity. Before pursuing a conservatorship solely to manage an insurance claim, consider whether any of the following alternatives might apply:

• Existing Durable Power of Attorney: Check whether the policyholder executed a durable power of attorney that grants authority over financial and insurance matters. If one exists, it may already provide the necessary authority without a conservatorship.
• Trust with Successor Trustee:If the insured property is held in a revocable living trust, the successor trustee may have authority to manage insurance claims on the trust’s property without a conservatorship. However, the successor trustee’s authority extends only to trust assets — if the claim involves personal property not in the trust, or if the policyholder individually (not the trust) is the named insured, additional authority may be needed.
• Community Property with Right of Survivorship: In some cases, a spouse may have independent authority over community property assets, depending on the nature of the claim and the specific insurance policy provisions. This does not eliminate the need for a conservatorship in all cases, but it may reduce the scope of authority needed.
• VA Fiduciary (for Veterans): If the policyholder is a veteran receiving VA benefits, a VA-appointed fiduciary may have limited authority over certain financial matters. This is a narrow exception and generally does not extend to managing property insurance claims.

Conservatorship and Insurance Claim Checklist

For families and attorneys navigating a conservatorship that involves an insurance claim, the following checklist summarizes the key steps:

1. Secure the property and mitigate further damage immediately— do not wait for the conservatorship to be established
2. Document all damage with photographs, video, and written descriptions as soon as possible after the loss
3. Notify the insurer in writing that a loss has occurred and that the policyholder is incapacitated
4. Check for existing estate planning documents— durable power of attorney, trust, or other instruments that might provide authority without a conservatorship
5. Consult a conservatorship attorney and begin the petition process immediately
6. File for temporary conservatorshipif there is an emergency — property at risk, approaching deadlines, or the insurer threatening adverse action
7. Consult an insurance professional— a public adjuster or insurance attorney — to begin building the claim file in parallel with the conservatorship proceeding
8. Once Letters of Conservatorship are issued, provide certified copies to the insurer and formally file or take over the claim
9. Post the required surety bond and file the inventory and appraisal within 90 days
10. Manage the claim— file documentation, negotiate with the insurer, authorize repairs, and collect payments
11. Before settling any disputed claim, petition the court for approval of the compromise under Probate Code Section 2505
12. If the bond needs to be increased after receiving insurance proceeds, petition the court or arrange for a blocked account
13. File annual accountingswith the court showing how insurance proceeds and all other estate funds have been managed (Probate Code §2620)

Related Resources

The topics covered in this article intersect with several other areas of insurance claim management. For additional information, see:

• Power of Attorney and Insurance Claims — How a durable power of attorney works in the insurance context, and why every policyholder should have one
• Cognitive Decline and Insurance Claims — The challenges that arise when a policyholder’s cognitive capacity is declining, including protecting the claim and the policyholder’s rights
• Insurance Claims and Probate — What happens to insurance claims when property passes through probate, and how the estate representative manages the claim
• Elder Abuse in Insurance Claims — Enhanced remedies available when an insurer engages in bad faith against an elderly or dependent adult policyholder
• Equitable Tolling of Insurance Deadlines — When the statute of limitations and other deadlines may be paused due to circumstances beyond the policyholder’s control
• What Happens to Insurance When the Policyholder Dies — Coverage issues that arise when the named insured passes away before or during a claim