This type of insurance is also known as General Partners’ Liability and Limited Partnership Reimbursement coverage.
A general partner’s management and fiduciary responsibilities to a limited partnership closely parallel the director’s or officer’s to a corporation. Exposure occurs when general partners become the financial managers of a limited partnership. The directors and officers of corporate general partners share this type of exposure.
Some causes of claims are as follows:
- Untrue written or oral statements made by the general partners
- Breach of fiduciary duty
- Incomplete disclosure of facts
- Omission or misleading statements in the offering memorandum
- Selling of unregistered limited partnership interests
- Conflict of interest
- Failure to devote adequate time to the partnership
- Appointment of drilling contracts without proper prior investigation as to their experience
- Failure to minimize risk factors that prove detrimental