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What is Management Liability Insurance?
Management liability refers to a suite or package of insurance policies specifically designed to protect a company and its directors and officers (Management). Commonly, a management liability package will contain coverage for Directors and Officers Liability (D&O), fiduciary liability and employment practices liability (EPL) and in some cases Special Crime Insurance.
Depending on your risk exposure and situation, policies can be bundled together with a combined limit or structured with specific limits dedicated to each line of coverage. Every company is different but we have dedicated Management Liability experts, who will figure out what makes sense for your business.
Why do you need Management Liability Insurance?
Many assume that only large corporations need a management liability package when in truth, for even early-stage startups it can be a necessity. If your company is experiencing rapid growth, funding, and hiring your exposure increases correspondingly and your personal assets could be at risk.
1/4 Suffer D&O Losses
Over a quarter of all private companies experienced a D&O-type loss. The average total cost for companies without D&O insurance is $394,000 following these types of losses. The highest reported loss clocked in at over $17,000,000.
Employment Disputes
More than 1 in 10 US companies were estimated to have been involved in an employment practices dispute. Once a claim does hit, you can expect a $125,000 price tag on any dispute that results in a judgment or settlement.
The Fiduciary Equation
If your provider mismanages 401(k) or employee stock ownership plans your personal assets may be at risk. Highest duty known to law + Personal Liability + Legal and/or Financial Inability to Indemnify = Exposure of personal assets.
Fraud Loss
Companies worldwide lose $3.5 trillion to fraudsters every year — and the figures continue to devastate small and large businesses.
Management Liability Coverages
Core Coverage
Management liability insurance consists of three core coverages
Directors & Officers
D&O insurance protects the company and its executives from certain claims made against them. Shareholders, competitors, investors, etc., can sue a company’s directors and officers, putting their personal assets at stake. Directors and officers (D&O) insurance protects these assets from lawsuits alleging leaders of wrongful acts managing the business.
Employment Practices Liability Insurance
Any company with employees faces the risks of allegations, such as discrimination, wrongful termination, breach of contract, etc. This coverage protects companies against lawsuits related to employment practice
Fiduciary Liability
When a company sponsors an employee benefits plan, it accepts fiduciary responsibility to its employees. This coverage protects from legal liability should a benefit plan administrator practice improper plan care.
Specific
In some cases, companies may consider protecting losses from criminals targeting key management
Special Crime Insurance
This policy covers losses arising from the kidnap and holding for ransom of a corporate employee, extortion or from the threat to do harm to a person or to certain property if a ransom is not paid.
Get a Free Management Liability Risk Assessment
If you’re unsure whether your current management liability program is adequate or you’re looking to implement a new one, find out where you stand with the help a Founder Shield expert.
They will assess your current risk profile and provide direction on a management liability program custom built for your company.
