1. Forms
2. MP
3. MP-04

What the Form Is

The MP 04 series refers to a category of endorsements provided by Insurance Services Office (ISO) for use with their Management Protection insurance program. These endorsements are not standalone policies; instead, they are attached to primary Management Protection Policy Coverage Forms (e.g., MP 00 01, MP 00 06) to modify the policy's terms. The purpose of the MP 04 series is to offer additional coverages or to extend existing ones, allowing for greater customization of the insurance policy to meet the specific needs of the insured organization. Each endorsement within the MP 04 series addresses a particular type of risk or provides a specific coverage enhancement.

Classes of Business It Applies To

MP 04 endorsements are utilized by a diverse range of organizations that purchase Management Protection liability insurance. This includes:

• For-Profit Companies: Both publicly traded and privately held businesses seeking to protect their directors, officers, and the company itself from management liability claims.
• Not-For-Profit Organizations: Such as charities, foundations, and associations that require coverage for their trustees, directors, officers, and the entity. For instance, the MP 04 02 Coverage Extension–Acquisition or Creation of For-Profit Organization endorsement is designed for not-for-profit entities that acquire or establish a for-profit subsidiary.
• Financial Institutions: Banks, credit unions, and other financial service providers often have unique Management Protection exposures that can be addressed through these specialized endorsements.

Real-world examples of MP 04 endorsements include:

• MP 04 01 – Coverage Extension – Outside Service: Provides coverage extension for insured persons serving in positions at other entities at the named organization's request; this coverage is typically excess over any indemnification or insurance provided by the outside entity.
• MP 04 04 – Coverage Extension – CAP Penalties: Expands the definition of 'Loss' to include certain penalties imposed under the IRS Closing Agreement Program (CAP) related to employee benefit plans.
• MP 04 07 – Coverage Extension – Spousal Coverage: Extends coverage to an insured person’s lawful spouse when the spouse is named in a suit due to the insured person's wrongful actions, but not for the spouse's own wrongful conduct.

Special Considerations

• Specificity: Each endorsement in the MP 04 series is tailored for a specific purpose. It is crucial to select the endorsements that accurately reflect the insured's particular exposures and coverage requirements.
• Base Policy Interaction: MP 04 endorsements amend the underlying Management Protection policy. All other terms, conditions, and exclusions of the base policy remain applicable unless explicitly modified by the endorsement.
• Edition Dates: ISO revises its forms periodically. The edition date (e.g., '10 06', '05 09') on an endorsement is significant as it denotes the specific version of the form language being used, which may contain material differences from previous or subsequent editions.
• Availability: While these are standard ISO forms, their availability or specific wording might be subject to state-specific variations or insurer adoption.

Key Information for Agents and Underwriters

• Needs Analysis: Agents must conduct a thorough risk assessment of the client’s operations, including any outside directorships, subsidiary structures, and employee benefit plans, to determine the applicability of various MP 04 endorsements.
• Addressing Coverage Gaps: These endorsements are valuable tools for agents to fill potential coverage gaps in standard Management Protection policies, thereby providing more comprehensive protection for their clients.
• Underwriting Implications: Underwriters need to evaluate the additional risk assumed with each MP 04 endorsement. For example, endorsing a policy with MP 04 01 (Outside Service) requires an assessment of the types of outside entities involved and the potential for claims arising from those roles.
• Premium Considerations: The addition of MP 04 endorsements typically involves an additional premium that should be commensurate with the broadened coverage and increased exposure.
• Clear Communication: It is vital for agents to clearly explain to insureds how these endorsements enhance their coverage, as well as any remaining limitations or conditions.