What is Management Liability?
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).
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.
Our Management Liability Product Suite
Directors & Officers Insurance
What it covers:
D&O protects the company and its leadership from certain disputes related to the management of the company. Suits from investors who feel you breached your fiduciary duty; complaints of unfair trade practices from competitors; investigations into securities violations by regulators…all of these (and many more) are major concerns which can be addressed by D&O.
Why you need it?:
Management liability claims are common. D&O insures the company and its leadership is protected from legal liability related to allegations of breach of fiduciary duty and other management-related claims.. You, your investors and your board members will all rest easier knowing there’s an insurance policy providing a safety net.
Employment Practices Liability Insurance
What it covers:
Protects the organization and its management by paying the costs of defending against certain suits from employees or investigations from government agencies. Companies can get caught up in rapid growth at the expense of sound HR practices. Allegations of sexual harassment, wrongful termination, discriminatory hiring/firing practices and retaliation are more likely for these companies.
Why you need it:
EPLI helps to reduce the impact of these disputes by paying defense costs as well as settlements and judgments against the company or its leadership. If you or the organization itself is named in such a claim, the coverage would defend you and pay the judgment or settlement against you. Keep in mind how easy it is for an employee to start an action that requires a legal defense.
Fiduciary Liability Insurance
What it covers:
According to ERISA, if your company decides to sponsor an employee benefit plan, it takes on a new fiduciary duty to its employees. ERISA actually gives these companies and their leadership teams a very important title: fiduciary. Fiduciary Liability provides protection from legal liability related to the sponsorship of an employee benefit plan.
Why you need it:
Fiduciary liability insurance is intended to round out your risk management program. A standard D&O policy won’t cover you for any claims related to violations of ERISA. Nor would any of your other policies. And unlike an ERISA fidelity bond, the policy will not cover claims arising out of dishonest acts or fraud.
What it covers?
Crime insurance is designed to protect the company from loss caused by certain illegal activities. Unlike many other commercial insurance policies, it has little to do with defending against lawsuits from third parties. This policy instead reimburses the company itself for losses of money, securities or other tangible property that it directly experiences.
Why you need it?
No one thinks they’ll be the victim of a crime until they are and businesses are no different. Billions of dollars are lost each year by companies who were the targets of criminal activity. Employees can set up dummy vendor accounts and pay themselves over time. The office can be burglarized. Criminals can use targeted wire transfer and computer fraud schemes.
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.
¼ 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.
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.
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.
Thoroughly enjoy working with the entire Founder Shield team. They not only took care of our insurance needs in a stress-free manner, but creatively structured solutions unique to our business model that has helped us continue to scale and grow
Great mix of old-school customer service with awesome use of technology to make the process as seamless as possible.
The Founder Shield team is undeniable a wonderful and very support partner. Not only are they 100% devoted to your company and insuring compliance, they provide continuously guidance as we are not experts in the insurance field. They work around the clock collaboratively and we appreciate all that they do for us. Rachel Jenkins is our dedicated account manager and she is extraordinary – I have never met a partner who goes above and beyond like she does to ensure all of our needs are met!