It has been observed that many trading members of the Exchange did not obtain coverage through stockbrokers' liability insurance policies offered by any of the insurance companies. SMD/SED/RCG/270/96, dated 19th January 1996, has enjoined brokers on all stock exchanges to take insurance coverage. Policies cover personal liability for corporate directors, but also reimburse an insured firm if it has paid third-party claims on its manager's behalf to protect them. Both indemnity and life insurance policies offer protection against losses of an insured person in return for a premium, to a specified limit.
The amount covered by the insurance depends on the particular arrangement, and the insurance's value depends on several factors, including a history of claims under the indemnity. The attorney's fees associated with defending you, and the cost of any monetary award, are covered under your professional liability insurance. Insurance policies for professional businesses, such as your brokerage, can cover the costs of a potential lawsuit against you, and also demonstrate your financial security to other businesses who may be willing to do business with you. A standard brokerage professional liability insurance policy does not cover claims of personal injuries and property damages arising from the performance of your job.
As a stockbroker, you may wish to buy an "out-of-date" professional indemnity insurance policy, which will cover you against claims made against you in the future, relating to work performed in the past. The answer has significant implications should your policy be allowed to lapse or revoked, and should you retire or sell the business, because any claims made against you after your policy has expired would be uninsured by a stockbroker's professional indemnity policy. Typical examples of indemnity insurance include professional liability insurance policies such as medical malpractice and error-and-omissions insurance (E&O;). Some professionals who should have indemnity coverage include those who provide financial services and legal services, such as financial advisers, insurance agents, accountants, mortgage brokers, and lawyers.
A standard commercial property insurance policy will provide some protection for critical documents, but the standard policy likely would not cover the cost of replacing some documents and records, or the considerable expense required to replace them. Please note that, if you choose to buy a separate Fidelity Insurance Policy, the form will require two documents to be attached.
If, as is the case in some territories, the certification is provided to certify coverage, but wording follows weeks later, then you may wish to use the Update Professional Indemnity feature to attach wording as it becomes available. Mr. BAGRI. David Bellamy believes E&O; coverage is vital for a risk management framework, it needs to be incorporated into coverage, and it helps investor protection more than anything else. While the insurers argue the rise in premium amounts is because the claim rates are higher in policies, broker associations have said the higher claims rates, as stated by insurers, are misguided, with many claims being rejected frequently for technical reasons.
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