Errors and Omissions for Registered Reps/RIA

[Sam]

Question for all you registered reps out there. How does E&O work for an RIA, do you need to take the E&O offered by your Broker Dealer or can you choose your own?

If you need to take the E&O offered by the BD, do they cover you with a specific limit, or are you limited to the aggregate of a master policy?

Also, if you were with a BD for a while and then switch to a new BD or even let your license drop, can you port the first BD's E&O policy with you, or does it end when you leave their employ?

Does the E&O cover you first if you have a dispute over facts with the Bd or is it a master policy and their loyalty is to the BD first?

Does it pay to buy your own E&O to supplement theirs and to have something portable or is that just a waste?

Thanks

 

[djs]

Can I say 'It depends'. Does that clarify it enough?

I would assume most Registered reps take coverage from their B/D, which is usually a master policy with an aggregate limit but with sublimits on the individuals. You have to hope your claim is paid before they hit the master policy limit

I've never seen a situation where you could keep an old B/D E&O policy and not be associated with that B/D. I could be wrong, just haven't seen it. You do usually get tail coverage though, so you don't have to carry another policy if you leave the business.

Loyalty is almost always with the B/D first. I haven't known many people to have claims on their RR E&O policy, so I haven't seen situations where there were disputes about who was at fault for what, but just assuming its anything like a P&C carriers (captive) E&O, they always go with the person who writes the check to the E&O carrier first!!!!!

Some B/D will allow you to use your own, rather than theirs. I wouldn't bother to carry a second policy, but I would prefer to have my own rather then the B/D's policy.

All of these questons makes me remember why I didn't renew my license at the beginning of the year

Dan

 

[maksim]

Heh? Please confirm. Are you going to be your own RIA, or dually registered RIA and commissed rep for a BD? Or going to be an IAR under an existing RIA?

My RIA coverage covers me for both life and investment business. But it will depend on what your compliance person for the broker dealer will want.