What's Covered

Please note

The following summary of coverage does not substitute for an insurance policy. Any questions concerning the terms, conditions and exclusions of a policy should be referred to the insurer or by reference to the policy wording with the assistance of an appropriately qualified legal adviser.

Basic Coverage

The cost of hiring a defense attorney for you and pay any settlement amount arising out of an errors and omissions lawsuit which is brought against you during the policy period and arises out of the services you have provided to a customer. It can include a suit for defamation or violation of the customer’s right to privacy. The policy may also contain some additional coverages for subpoenas, disciplinary actions or loss of earnings.

Limitations

Coverage is capped at a fixed dollar amount for each claim and usually, there is a cumulative cap on the total of all claims during the policy period. This is known as the limit of liability.

All claims are subject to a deductible. This is the amount you must pay before any insurer will contribute. It is usually deducted for each claim if there is more than one claim during a policy period.

Coverage is limited by the retroactive date. This is the date you first bought insurance and generally an insurer will not pay claims for services performed by you before this date.

Definitions

These are the terms in the policy that define certain words and expressions used in the policy to ensure that there is no doubt as to the insurer’s intention.

Exclusions

Things that are NOT covered:

  • Claims or potential claims that you knew about BEFORE you bought the policy.
  • Claims arising from prior acts (see retroactive date above)
  • Bodily injury or Property Damage claims
  • Claims from business you own or control
  • Claims from one insured person against another insured person
  • Claims for illegal profits
  • Criminal or intentional acts, or fraud
  • Insolvency of an FI or broker-dealer
  • Discrimination or harassment
  • Anti-trust claims
  • Theft of trade secrets or infringement of copyright
  • Contractual liability
  • Pollution claims
  • Foreign securities
  • Activates as a market-maker or clearing agency
  • Return of fees
  • Express guarantees of returns
  • Hedge funds, private placements, commodities, collectibles, auction-rate securities, ARMs, CDOs, CBOs, CMOs or commercial promissory notes.
  • Viatical products, credit default swaps, Real Estate (not REITs traded on a national exchange), Penny stocks, COLI, BOLI or life insurance where the purchaser lacks an insurable interest, Uncovered option contracts.
  • Insider trading
  • Syndication or investment banking
  • Sales of products that you totally own or control.

Conditions

This section of the policy provides guidance and instructions in the event of a claim, if there is other insurance, requests for an Extended Reporting Period and how to cancel the policy. The section also defines the territory where coverage applies.

Endorsements

An endorsement is a separate rider attached to the base policy that modifies the terms of coverage including adding exclusions and coverage limitations. Endorsements override the coverage provided by the policy and should be carefully reviewed.

This is merely a summary of what a policy contains and reference to the actual wording is necessary to determine the actual terms, exclusions and conditions of coverage.