From in-kind distributions to IPOs and down round financing, the business activities of venture capital firms and their partners have created a host of unique exposures. Venture Capital Asset Protection (VCAP) policy offers your venture capital clients a comprehensive insurance product to assist in transferring and mitigating some of their personal and business risk from these types of exposures. Venture Capital Asset Protection (VCAP) policy is a combined product offering management liability, management indemnification, outside directorship liability and professional services liability (errors & omissions) insurance in one policy to help eliminate any gaps in your client’s insurance program. With our combined VCAP policy, venture capital firms receive true value and one of the broadest policies in the industry. Introduced in 1997 by our reinsurance partner Chubb, which has continually enhanced its VCAP policy to keep pace with the changing legal exposures your clients face. As a result of this experience, we offer you a highly specialized risk transfer solution for your client. The Venture Capital Asset Protection Policy is highly effective at addressing the needs of many types of private investment firms, including:
- Venture Capital Funds
- Private Equity Funds
- Fund of Funds
- Mezzanine Debt Funds
- Distressed Debt Funds
- Small Business Investment Companies
- Corporate-Sponsored Funds
- Government-Sponsored Funds
What is included?
The following are automatically included with every VCAP policy:
Insuring clauses:
- Management Liability
- Management Indemnification
- Professional Services Liability
- Outside Directorship Liability
Coverage features:
- Creation of another Private Fund
- Worldwide Scope of Insurance
- Advisory Board Liability
- Insurance for Securities Actions
- Controlling Shareholder Liability
- Estates and Legal Representation
- Spousal Liability Extension
What is protected?
Policy is specifically designed to address those organizational structures typically used by the venture capital industry:
- Limited Partnerships
- General Partnerships
- Limited Liability Partnerships
- Limited Liability Companies
- Stock Corporations
Who is protected?
Our policy offers protection for the firm’s critical contributors, including past, present and future:
- General Partners
- Managing Members
- Directors & Officers
- Employees
- Advisory Board Members
Policy Features
- Broad professional services liability –Includes the formation, capitalization, operation and management of a private investment fund –Includes lenders’ liability for those situations when permanent or temporary credit vehicles are more appropriate investments for a portfolio company –Includes the customary financial and strategic advice given to develop portfolio companies
- Broad outside directorship liability –Insurance for outside directorships on not-for-profit or private portfolio companies –30 days’ insurance for outside directorships on publicly listed portfolio companies –Run-off coverage, until the end of the policy period, for insured persons who resign from an outside board position
- Claims made policy form
- Insured’s have the right to choose their own legal counsel subject to approval
- Advancement of defense costs
- No prior acts exclusion
- Severability of all exclusions for insured individuals
- Extended reporting period available
- In-house capacity up to $25 million, with various deductible options
- No exclusions or limitations on suits brought by portfolio companies against the venture capital firm, its employees or management
- Policy is non-cancelable by ERGO, except for non-payment of premium
- No exclusions for tortious interference, intellectual property or antitrust