A financial consultant was retained by a mid-sized private clothing retailer to assist with optimizing its balance sheet and capital structure. The consultant advised a short-term loan to improve inventory. The retailer fell on hard times and was forced to sell assets in order to meet short-term obligations. The retailer believed that its financial condition was the direct result of acting on bad advice from the consultant and brought a lawsuit alleging $1.5 million in damages.
Increase to E&O Premium: $6,000
Total Cost to Carrier: $117,000 (after deductible)