Has any insurer declined, cancelled, or non-renewed any Investment Advisor Professional Liability Insurance or any similar insurance on behalf of any applicant for this insurance?

This question assesses the risk profile of the applicant. Underwriters check for past declinations, cancellations, or non-renewals because they can indicate a higher-risk client, potentially due to a poor claims history, financial instability, or other underwriting concerns. This history helps the carrier understand the applicant's past interactions with other insurers.

• What is a "Declination"? A declination occurs when an insurance company refuses to provide a new policy after a formal application has been submitted. This means you applied for coverage but were turned down.
• What is a "Cancellation"? A cancellation is the termination of an active insurance policy by the insurer before its scheduled expiration date.
• What is a "Non-Renewal"? A non-renewal happens when an insurer decides not to renew a policy at the end of its term. The coverage continues until the expiration date but is not offered for a subsequent term.
• What does "similar insurance" mean? This refers to any other professional liability coverage specifically for investment advisory services that an applicant has had, even if it wasn't titled "Investment Advisor Professional Liability Insurance."

To answer this question, you need to confirm if any of the following have happened to your firm or any person who needs to be insured under this policy:

• Declined Coverage: Has any insurance company ever refused to offer you this type of insurance after you applied?
• Cancelled Coverage: Has any insurer ever terminated an active policy of this kind before its end date?
• Non-Renewed Coverage: Has any insurer ever chosen not to offer you a new policy at the end of your coverage term?

If any of these apply, you must provide details for each event. If none of these situations have occurred, you can simply answer "No."

• Mistake: Confusing the different types of coverage.
  • Remind the client that this question is specifically about professional liability insurance for investment advisors, not other policies like general liability or property insurance.
• Pitfall: Relying on memory alone.
  • Encourage the client to check their records if they are unsure. An honest "I don't recall" is better than an incorrect "No," but checking records is best.
• Mistake: Fearing the consequences of disclosure.
  • Reassure the client that full and honest disclosure is critical. Hiding a past declination or cancellation is often worse than the event itself and could jeopardize their coverage.