Financial & Professional Services

Commercial liability packages (sometimes referred to as CPP's or BOP's) provide balance sheet protection in the form of financial reimbursement and liability protection in the form of coverage for defense costs and damages resulting from:

• Claims asserting bodily injury and/or property damage
• Product liability claims (unless excluded)
• Advertising Injury such as libel, slander and infringement related claims 
• Theft and property damage losses for inventory, business property, machinery, etc
• Loss of business income
• Equipment breakdown
• Key Broadening endorsements (Transit coverage, basic cyber, employee dishonesty, ERISA, basic EPLI, and more)

Due to the fact that endorsements can either broaden and extend coverage or limit/exclude coverage, policies should be carefully reviewed. Seemingly small endorsements such as “selling price” endorsements and business income coverage for dependent properties (such as suppliers, retailers and leaders) can provide substantial coverage enhancements. Due to the advertising risks faced by this sector, it is also often wise to seek coverage through a carrier that has a strong reputation for advertising coverage.

Because professional liability claims and more traditional D&O related claims are so similar and closely related in this sector, most insurance companies combine professional liability and directors and officers insurance on the same policy. This can also help achieve more competitive pricing. Additional coverage components can include crime (to protect against employee theft and dishonesty), employment liability (to protect against claims asserting wrongful termination, sexual harassment, retaliation, failure to promote and more), and Fiduciary liability which provides protection against errors and losses caused to employee benefit plans. While some funds/firms take an all inclusive approach and elect to include these additional coverages, others prefer to preserve policy limits for pure professional and director liability claims. As with all professional and management liability policies, coverage, terms and conditions vary. Careful consideration should be given to whether coverage is included for:

• Investigations, regulatory and administrative proceedings and resulting fines and penalties
• Cost of corrections
• Consequential losses
• ODL (outside directorship liability) 
• Are there any hidden “choice of law” or forum clauses that apply foreign law or require coverage disputes to be determined/adjudicated in foreign courts

Trends increasing the potential for claims include:

• Traditional fee structures are being challenged
• Oversight is increasing and regulatory framework tightening
• DOL’s (department of labor) newly passed fiduciary rule  
• SEC and law firms are increasing their pursuit of smaller companies and private equity & venture capital firms. 
• SEC’s increased usage of ALJ’s (administrative law judges) is making it easier to pursue actions

Workers Compensation insurance is a mandatory coverage for companies with employees (including volunteers, uninsured independent contractors, leased or part time labor). It provides coverage for employees’ wages and medical payments resulting from injuries sustained while “on the job”. Coverages to consider include “broad form all states” coverage and foreign workers compensation coverage (especially important for employees traveling abroad for business). Additional employee related coverages that should be considered include: 

• Key Man / Key Person Insurance
• EPLI/Employment liability (protection for the hiring/firing of employees and discrimination/harassment related claims)
• Employee benefits
• ERISA/Fiduciary coverage (for the administration of employee benefits)
• Long term disability
• Kidnap & Ransom (for employees traveling abroad for business)

Cyber Liability insurance provides

• First Party coverage in the form of balance sheet protection for damages sustained by the entity including: lost income and restoration costs, notification and credit monitoring costs, costs related to extortion demands, and more
• Third Party liability protection for claims and lawsuits arising from: failure to protect from (or prevent) an intrusion or transmission of a virus or attack, regulatory actions, media related liability, claims asserting breach of intellectual property and more.

Claims can arise from

• Data Breaches, viruses and unauthorized access 
• Lost or stolen laptops and lost or stolen paper records
• Transmission of a virus to others
• Rasomware and extortion demands
• Clerical and human errors in opening or transmitting files
• Order Processing 

Crime & fidelity insurance provides protection for the entity against financial losses resulting from crime, theft and dishonest acts committed by employees, executives, independent contractors and other parties. Claims can include theft of money or securities, forgery, alteration, computer fraud, fraudulent invoicing, credit card and funds transfer fraud and more. More modern schemes include social engineering attacks (such as business email compromise, also known as CEO fraud).