Management Liability Insurance Coverages

The following is a summary of the insurance coverages that are available:
Directors & Officers Liability (D&O)
D&O coverage is designed to protect the personal assets of any past, present or future director, officer, partner, member, employee or advisory committee member (individual insured) against losses arising from an actual or alleged act or omission, error, misstatement, misleading statement, neglect or breach of duty in exercising his/her duties.
  • A-side Coverage: (individual coverage for unindemnified claims) protects individual insured where the corporation is unable to indemnify them, normally due to State indemnification laws or insolvency of the firm
  • B-side Coverage: (individual coverage for indemnified claims) provides reimbursement to the firm for claims that the insured entity indemnifies on behalf of the targeted individual insured. The majority of D&O claims are covered under this section of the form
  • C-side Coverage: (entity coverage) protects the firm from shareholder lawsuits, class action litigation and regulatory actions as well as extends coverage to the financial institution. The law often imputes a greater duty to the corporate entity and the financial institution often bears a share of any loss
Investment Advisers Professional Liability (RIA E&O) Top of Page
RIA E&O coverage extends to the individual insureds and the financial institution for professional services rendered. This includes financial, economic and investment advice (including professional supervision and oversight as well as related computer services) given or performed for others by the adviser. The focus of this product is to respond to customer, client or investor claims (as opposed to regulatory or shareholder parties).
Investment Fund Management &
Professional Liability (Fund Management E&O) 		Top of Page
Fund Management E&O is a hybrid between D&O and E&O coverage. The product is usually tailored to respond to claims brought by liable parties against the general partnership for mismanagement of funds. The intent of the fund management E&O provision is to cover the "...services rendered in connection with the management or operation of such Private Fund...".
While there is some obvious overlap between the investment advisors and fund management E&O coverages, there are some intended differences. The intent of the investment advisers E&O policy is to follow the services outlined in the agreement between the advisor and its investors/clients. The intent of the fund management E&O policy is to cover the services rendered in connection with managing or operating the private fund. Additionally, the fund (as a legal entity) is specifically named to the fund management E&O provision as a covered entity.
Employment Practices Liability (EPLI) Top of Page
EPLI coverage protects the financial institution and individual insureds against losses arising from any actual or alleged wrongful termination, discrimination, sexual harassment or other violation of statutory or common law relating to employment. This coverage would respond to employment defamation or retaliation claims and provides coverage for mental anguish or emotional distress.
Fiduciary Liability (FLI) Top of Page
FLI coverage protects the financial institution and individual Insureds against losses associated with a breach of fiduciary duty resulting from administering employee benefit plans subject to the Employee Retirement Income Security Act of 1974 (ERISA). Please note this insurance coverage relates to plans sponsored or offered by the company for their own employees (the advisor's fiduciary responsibility to its clients/investors is intended to be covered under the E&O program).
Financial Institutions Bond (FI Bond) Top of Page
Agreement A, the most important part of a financial institution's bond coverage, covers dishonest or fraudulent acts committed by employees acting alone or in collusion with others. The remaining provisions in the bond form are designed to respond to various forgery, fraud or theft actions against the financial institution.
Investment Advisors ERISA Bond (Fiduciary Dishonesty) Top of Page
A fiduciary dishonesty bond is a requirement under Section 412 (a) of ERISA for every fiduciary responsible for managing a pension, profit-sharing or thrift plan and every individual/entity that handles the assets of such plan. A more comprehensive summary of these requirements are included in our ERISA Law Summary for Asset Managers