Investment Professionals’ Errors and Omissions Insurance
- Tailored coverage for individual Registered Investment Advisers and RIA firms
- Portable, individual coverage for you or your firm -- no sharing of limits or coverage cap – with matching prior acts protection for qualifying risks.
- Fast, affordable and comprehensive legal liability protection backed by the solid resources of one of the world’s top 20 general insurance and reinsurance groups.
- Instant coverage via payment by credit card or bank debit card.
- Premiums start at $850 for an individual RIA ($950 for a firm) and coverage can be expanded to include investment product sales, life insurance agent services, management liability and cyber perils.
- Dollar One defense coverage with a standard indemnity deductible of $5,000 per claim.
- Includes Costs of Corrections (Trade Errors) coverage.
- Covers Fraudulent Instruction Funds Transfer Claims up to $150,000.
What is E&O Insurance?
Errors and Omissions [“E&O”] policies cover judgments, settlements and defense costs if you are sued by a client. Even if the lawsuit is groundless, thousands of dollars may be needed to defend the lawsuit. A lawsuit can bankrupt you. Simply speaking, E&O coverage protects for you in the event that your error or omission has caused a financial loss for your client.
Who needs E&O Insurance?
The vast majority of investment professionals purchase E&O insurance protection. In certain States, coverage is mandatory (or may be soon). Advisers, Financial Planners, Broker-Dealers and Life Insurance Agents are traditionally the target of lawsuits from dissatisfied clients. E&O insurance pays for a lawyer to defend you (or represent you at an arbitration hearing) and the cost of settling the claim.
Why do I need coverage?
To put it very simply, we all make mistakes - even with top quality staff and the best business practices in place. A mistake can cause a loss of reputation to you and a financial loss to your client. If you don't buy E&O insurance, you can be taking a serious financial risk. E&O losses are not covered under a general liability policy. And even if you are not at fault, the cost to defend a claim is time consuming and expensive.
When should I buy E&O insurance?
The best time to buy an E&O policy is before a job starts. If you are in a service business make E&O insurance a part of your insurance program. Many contracts with customers, banks or affiliates will require E&O insurance to be in place. In some cases, it is a selling point with your customers. It gives them the peace of mind of knowing they will be compensated if there is an error or omission.
What is covered by E&O Insurance
The AdvisersGold™ select policy provides coverage for services you perform for a client or professional association in your capacity as an appropriately licensed, accredited or certified Investment Adviser or Registered Representative. This includes financial Planning Services, services as a life insurance agent and services as an advisor as defined by ERISA Section 402(c)(3). Cover is extended to include activities as a fiduciary and social engineering liability [1]. Coverage can be extended to include a variety of cyber liability and first party cyber coverage.
[1] subject to the full policy terms and endorsements
What affiliations or professional groups receive a premium discount?
The following professional affiliations receive expanded coverage and a premium discount:
- Fi360
- The Financial Planning Association (FPA)
- The National Association of Insurance and Financial Advisors (NAIFA)
- The National Association of Personal Financial Advisors (NAPFA)
- The Society of Financial Service Professionals (FSA)
- XY Planning Network
- Garrett Planning Network
- Association for Financial Counseling & Planning Education® (AFCPE®)
Who can buy coverage through AdvisersGold™ Select?
The AdvisersGold™ Select program is available to most RIAs but specifically you must have:
- earned no more than $1,000,000 in revenue as an individual RIA (or $2,000,000 for a firm) in the last year
- no more than 5% of your income earned from the sale of alternative investments
- no FINRA, SEC or state regulatory complaints against you or any member of your firm in the past five years
- not been formally accused of violating any professional associations code of ethics
- not been audited by a regulatory agency in the past 5 years
- no ownership interest in any investment product you sell or recommend to a client
- not provided personal management services (e.g. talent management or bill paying, etc.) to any professional entertainers, celebrities, athletes or musicians
- not been the subject of an errors or omissions claim in the past five years
- not been made aware that you or any person proposed for this insurance of any potential Errors & Omissions claim that may be brought against you
- not been the victim of any social engineering, fraudulent wire transfer request or other criminal act designed to deceive you into sending funds to a third party