Certain coverage amendments are necessary as respects both Directors & Officers Liability and Comprehensive General Liability coverage for limited liability companies, limited liability partnerships, professional service liability companies, registered limited liability partnerships, etc.
A typical Directors & Officers (D&O) Liability policy form may not be appropriate for a limited liability company (LLC) or any other similar entity such as those listed above. In all likelihood, a carefully worded endorsement to clarify full coverage intent for this exposure must be added. A Limited Partnership Liability policy is necessary to provide D&O coverage to a limited liability partnership.
As respects Comprehensive General Liability (CGL) coverage, it is essential that the aforementioned business entities be listed and specifically designated as to type in the policy declarations. This requirement is indicated in the last paragraph of the “Who Is An Insured” provision, which reads:
No person or organization is an insured with respect to the conduct of current or past partnership or joint venture that is not shown as a Named Insured in the Declaration.
All current and past limited partnerships, joint ventures, etc., must be named in the policy.
CGL coverage for a LLC is a problem. The coverage part as it exists now extends coverage to shareholders, officers, and directors. Those positions do not exist in a LLC, which has members and managers instead.
We believe that (but have not yet seen) an ISO endorsment has recently been made available that amends the “Who Is An Insured” provision to the following wording:
1. If you are designated in the Declarations as:
c. a limited liability company you are insured. Your members are insured but only with respect to the conduct of your business. Your managers are insured but only with respect to their duties as your managers.
In effect, as respects both D&O and CGL coverage for limited partnerships or limited liability companies, the verbiage of the policy must correspond to the nomenclature of the business entity in question.