What liability does an Investment Manager’s Insurance policy exclude?
Part of any insurance policy is a section outlining what the insurer is not covering. Whereas the insuring clauses and policy extensions establish cover, policy exclusions strip specific areas of cover away. Because an IMI policy effectively combines three policies, there are several exclusions which should be considered. They include:
- Prior/Known Claims or Circumstances
- Criminal, Fraudulent, Dishonest or Malicious acts;
- Bodily Injury & Property Damage;
- Contractual Liability;
- Claims made in respect of Fees or Commissions;
- Insured vs. Insured – this however includes a write back for specific cover for Defence Costs; and
- Various exclusions in respect of Fidelity/ Employee Theft.
Important conditions of an Investment Manager’s Insurance Policy
Claims made and notified: The professional indemnity and directors & officers sections of an investment manager’s policy are issued on a claims-made and notified basis. This means that the policy only covers claims first made against an insured during the policy period and notified to the insurer in writing during the Policy Period.
Advanced Payment of Defence Costs: This vital clause can be either a condition or an extension of an IMI policy. When a claim is lodged against a Insured it is important to act quickly. This clause ensures that legal defence costs are advanced so that the entity, and its personnel can get on with the defence of the claim.
Some insurances policies impose conditions on advancement of such legal costs to restrict the amount that will be advanced. As such it is important that policies are clear and unambiguous as to the advancement of these defense costs.
Tags: Business Insurance, PI insurance, Professional Indemnity, Professional Insurance Indemnity Insurance Broker
