Legal Alerts

Notice for Professional Liability Insurance


Broker-dealers that have insurance to protect themselves from liability to third parties likely have a form of professional errors and omissions liability insurance. Often this insurance is written on a “claims made” basis.  That means that the insurance applies to claims made during the existence of that policy. If a claim is made after a policy expires, one would generally look to a subsequent insurance policy to provide coverage.

This feature of the insurance makes providing notice of a claim particularly important. Every policy has to be analyzed under the precise language used in the insurance contract. That said, the policy will generally define what a “claim” is, and contain specific instructions pertaining to how the policyholder must provide notice, as well as the type of information that must be provided with the notice.

The failure to provide prompt notice can lead to problems. In fact, rather than ask whether the insurer has been prejudiced to late notice, some many courts consider timely notice to be a condition precedent to triggering coverage under a claims made policy. So failing to give proper notice could lead to there being no coverage. 

When one is served with a lawsuit, or an arbitration demand, that usually presents a clearly identified event that triggers notice to an insurer. Insurance policies will often define claims in terms of written demands. But what about circumstances that are less clear – something that isn’t quite a written demand, but something that nevertheless suggests a possible problem with liability?

Policies generally address this situation by also requiring notice of circumstances that may reasonably be expected to result in a claim. The purpose of this is to allow the insurer an opportunity to conduct an investigation into the possible problem in the hope of identifying and preserving evidence, as well as quantifying and mitigating potential liability.

The best practice concerning notice of claims or circumstances is to provide it early and to err on the side of disclosure.

Search Tips:

You may use the wildcard symbol (*) as a root expander.  A search for "anti*" will find not only "anti", but also "anti-trust", "antique", etc.

Entering two terms together in a search field will behave as though an "OR" is being used.  For example, entering "Antique Motorcars" as a Client Name search will find results with either word in the Client Name.


AND and OR may be used in a search.  Note: they must be capitalized, e.g., "Project AND Finance." 

The + and - sign operators may be used.  The + sign indicates that the term immediately following is required, while the - sign indicates to omit results that contain that term. E.g., "+real -estate" says results must have "real" but not "estate".

To perform an exact phrase search, surround your search phrase with quotation marks.  For example, "Project Finance".

Searches are not case sensitive.