Venture capital liability insurance
Designed for VCs
- Portfolio board positions
- Breach of investment mandate
- Allegations of negligence
- Regulatory investigations
- Misrepresentation
- Legal defence costs
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Why Superscript?
We stay ahead of risk
We have found certain liability insurance policies are too generic and you may discover your current policy doesn’t offer protection against more recent risks. Your portfolio companies are likely at the cutting edge, innovating to change the way we do things. We are specialists in protecting emerging risks and our health check review process will ensure both you and your portfolio companies are safe and protected.
Ultimate flexibility
Even if you’re already covered - and don’t want to start from scratch, we can help you fill in the gaps, so you can start by getting the cover you’re currently missing. Like all our insurance products, your premium can be split into monthly instalments to suit you.
A small, dedicated team
Our dedicated enterprise team can work with you to understand the risks you face, make recommendations for efficient cover, and help you to set insurance standards for the firms you invest in. You’ll benefit from the expertise of a dedicated account manager who understands you, your company and your insurance needs. If you need to claim they will be there to support you and guide you through the process.
What cover do you need?
Superscript specialises in understanding and sourcing cover for complex risks faced by fintechs. Below, we've summarised some of the most common covers required by VCs.
Professional indemnity insurance
This covers claims made against you for actual or alleged acts, errors, omissions, advice, misstatement, misrepresentation, neglect, or breach of duty.
For example, if a disgruntled investor were to make a claim against you, due to your fund’s under-performance, mismanagement, errors, or omissions.
Our cover can extend to include LP and GP entities as well as advisory boards, making sure all areas of your activities are covered.
Directors liability
This part of the policy is designed to cover claims made personally against directors, in association with their role. Typical claims of this kind tend to be (but are not always) linked to performance.
For example, an investor may decide to allege mismanagement and claim against you individually as a way to recover lost funds. Regulators, too, may launch investigations into a fund’s administration. Directors of FCA regulated firms are accountable under the Senior Managers and Certification Regime (SM&CR). Insurance can protect you from this risk.
Crime
Cover for losses from crime, whether committed by an employee or non-employee, including loss of your funds or funds that you are responsible for, following a financial crime.
Some examples of this are: a disgruntled employee siphoning money from the fund; a fraudulent email impersonating the CEO, or a company seeking investment using forged documents.
Cyber liability
Many policies don’t include this cover, but it’s an important cover for the vast majority of businesses. If you’re using email to exchange sensitive information with your clients or other stakeholders, cyber and privacy liability is relevant for you.
The GDPR dictates how a data breach should be handled, any deviation from these rules can be costly. A cyber policy will not only cover breach costs, but most insurers now include a breach response service which will give you access to specialist legal advice.
Frequently asked questions
What limit should I buy?
Your current broker should be able to share industry benchmarking information and help you find an appropriate limit of cover. You should also speak with a compliance specialist to identify any compulsory limits you need to purchase. You may also be contractually obliged by investors to purchase a certain limit, your broker should be able to assist you in identifying these requirements.
If you’re an Alternative Investment Fund Manager (AIFM) there are compulsory insurance requirements you need to consider. One of our team can discuss this with you to calculate the appropriate limits.
What information do I need to provide?
- Value of the companies or assets within your portfolio
- Performance information for assets including Initial Rate of Return (IRR), or similar
- Qualifications and experience of managing partners
- Structure chart (if you have more than one entity)
- Completed proposal form
How much does it cost?
The cost of cover will vary greatly depending on a number of factors. It’s best to speak to a specialist, who should be able to give an accurate estimate of costs after a brief call or meeting.
Some areas that will affect your rate are the following:
- The amount of turnover you generate and where in the world you operate
- The FCA permissions you have
- Investment strategy
- Your experience
Who could potentially claim against me?
- Investors
- Directors or employees of portfolio companies
- Lenders
- Minority shareholders
- Sellers and buyers of portfolio companies
- Portfolio company creditors and liquidators
- Portfolio company customers
A portfolio company is about to IPO. Is there anything else I should consider?
Most policies will include a ‘Prospectus Liability Exclusion’ which excludes any cover that would arise out of your portfolio company undergoing an IPO. We can provide a specific Public Offering of Securities Insurance (POSI) to protect you in the event that claimants allege misinformation or misrepresentation in your prospectus, pathfinder or final admission documentation.
What cover should our portfolio companies have?
All your portfolio companies should be purchasing their own directors and officers insurance. This will be a first line of defence for your company directors. This reduces the risk of claims against your own directors and officers insurance and demonstrates effective risk management resulting in savings on your own cover. We strongly recommend that all portfolio companies purchase their own, separate professional indemnity and cyber insurance for the same reasons.
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