Learn why understanding your practice and analyzing coverage issues protects your business.


What is covered under an RIA E&O Policy?

Each contract is different. The definition of Professional Services is critical in determining what is/is not covered. Also, be careful of exclusion added by endorsement.

Who is covered under a policy?

In most cases the definition of insured reaches to all past and present employees, officers, and directors. Be careful of how your policy treats independent contractors.

I have coverage but am not sure what is/is not covered?

We are familiar with nearly all of the contracts on the market and would be honored at the opportunity to assist you in determining how you are covered and what steps (if any) are necessary to obtain the best coverage.

What is the best way to determine if my current policy provides adequate coverage for my practice?

Golsan Scruggs can review your current policy and contrast it with the services you provide without obligation. During our RIASURE Review process we will also point out deficiencies in coverage, make recommendations and obtain competitive quotes for comparison purposes.

What information do you need me to provide to receive a quote?

Besides completing a full application, insurance carriers will usually request to review your ADV 1, ADV II & schedule F, sample client contracts, recent audits from SEC or other regulatory boards (if applicable), and financial statements for your firm.

What is a retro-active date?

Most underwriters issue a retro-active date which means that any act committed before this date is not covered. Proper negotiation of this subject is crucial.

If I change insurance carriers will I be able to keep my prior acts coverage?

Most carriers will honor your current prior acts date. If you are insured solely through your BD, your prior acts coverage could be limited.

What's the difference between Errors & Omissions Insurance and Fiduciary Liability Insurance?

As described above, the typical Errors & Omissions policy protects advisers against losses due to any actual or alleged negligent act, error or omission committed in the scope of their duties as investment counselors/advisers. By contrast, Fiduciary Liability Insurance is a subcategory of Errors & Omissions Insurance which provides additional coverage against a breach of duty by a fiduciary. For example, an adviser’s failure to diversify an ERISA plan’s assets or his violation of the “Prudent Investor Rule” would qualify as a breach of duty by a fiduciary. Those breaches can only be covered by purchasing an Errors & Omissions policy which includes Fiduciary Liability Coverage.

What's the difference between a Fidelity Bond and an ERISA/Fiduciary Bond?

An ERISA/Fiduciary Bond is simply an amended Fidelity Bond; both respond to claims involving dishonest acts but the ERISA Bond complies with the specific requirements of ERISA law. Note that an ERISA/Fiduciary Bond is required under Section 412(a) of the Employee Retirement Income Security Act of 1974 which mandates that every fiduciary of an employee benefit plan and every person who handles funds or other property of such plan must be bonded. The amount of the bond must be at least $1,000 and must never be less than 10% of the amount of the funds handled by the fiduciary up to a maximum of $500,000 per plan.

How do Fidelity and ERISA/Fiduciary Bonds differ from Errors & Omissions Insurance?

While Fidelity and ERISA/Fiduciary Bonds cover dishonest acts by a fiduciary, Errors & Omissions Insurance provides advisers with coverage against losses due to any actual or alleged negligent act, error or omission committed in the scope of performing their professional services.

What are the most common types of claims experienced by RIA’s?

Breach of fiduciary duty is the most common claim followed by breach of contract, negligence, and failure to supervise.

I just went through a claim… Can I still get coverage?

This can be quite difficult and each case is unique. Our job is to communicate the situation to our carriers and present your case in the best way possible. There is still hope!