Eight disadvantages of maintaining your professional liability insurance solely through your Broker/Dealer

 

1. Not portable

Insurance through your Broker/Dealer (B/D) is tied directly to the services you provide for that B/D.  If you move to   another B/D, or move on to provide other services, you can not take your insurance coverage with you.

 

2. Prior acts coverage may end when you leave the Broker/Dealer

In addition to not being portable, you will typically lose your prior acts coverage (coverage for previous work that you performed) when you move to another B/D.

 

3. Limits may be eroded by other Registered Representatives claims

The aggregate limit on a B/D policy is typically shared by all of their Registered Reps.  Therefore, claims against other Representatives may reduce your available coverage.

 

4. May not cover other services outside of the Broker/Dealer

A typical B/D policy will only provide coverage for services that you provide through that B/D

 

5. May exclude RIA activities

The B/D policy may not cover all of the services that you provide and typically will not provide coverage for RIA services.

 

6. May exclude entity coverage

A B/D policy is intended to provide coverage for the individual representative of the B/D.  Coverage may not be provide for you entity.

 

7. May limit best options as a fiduciary

Not all policies are the same and with increasing scrutiny on fiduciary responsibilities, you want to make sure your policy provides coverage for your role as a "fiduciary".

 

8. No ability to amend coverage as a certificate holder

As a certificate holder of your B/D's coverage, you do not have the ability to amend coverage as necessary to your specific needs.

 

NAPLIA offers stand alone professional liability insurance for all of the following risks:

If you have questions or would like more information please contact us.

 

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