New Times Call for a New Management Liability Policy
There's a surge in government investigations, lawsuits, and claims by various constituents due to rash management decisions in context of Covid-19 exposures.
Your business policy may not cover liability like breach of fiduciary duty, management errors, and violation of employment or securities laws.
We've partnered with Hull and E-Risk Services, a leading management liability insurer, to provide you a full solution to management risk.
Get A Fast, Free Management Liability Insurance Quote Designed for the New Normal. Starting at $22.50/mo.
Why Does Your Business Need Management Liability Insurance?
1. Risks to Directors and Officers. Losses related to the actions of directors and officers are more common than many realize. A single loss could be devastating to a growing business. Without proper protection, including directors indemnity insurance, businesses face sizable exposure that can affect cash reserves, working capital, or even personal assets.
2. Protection from violations of employment laws. Employment liability claims are on the rise. Anybody can make a claim against the company, the directors, officers, and employees for wrongful acts and issues arising from employment practices. Most claims covered include harassment, discrimination, termination, and retaliation.
3. Risks to entire business. In most cases, businesses face D&O (Directors & Officers) related lawsuits from customers. But vendors, government agencies, regulators, partners, and shareholders can also file legal claims against your company. Costly litigations, lengthy court process, legal defense costs, and damage to your business reputation all wear on a business, causing a decrease in productivity and a decrease in morale. Without the coverage provided by directors and officers liability insurance, even a simple allegation, regardless if it’s true or not, can be costly, and time-consuming, and an unproductive distraction from the needs of the business.
Top Reasons Organizations Think They Don't Need Management Liability Insurance
1. We are immune to the risk. One reason why small private companies and non-profit organizations don’t buy management liability insurance is because they think they’re immune to the risks. They think they’re too small, too familiar, or too philanthropic to be accused of a management liability blunder. But, claims data would suggest otherwise. Even family-owned and family-run companies can find themselves embroiled in nasty management liability lawsuits. That’s why educating private and non-profit firms about the huge variety of potential claims, and the sources they can come from, should be a primary exercise for brokers or agents selling management liability insurance.
2. Private and non-profit firms don’t generally see a lot of Management Liability claims. Sure, but you generally don't see a lot of heart attacks, yet you still buy health insurance. Directors & Officers claims generally are more severity-driven exposures rather than high-frequency events. That often makes smaller companies question the odds that they will be sued. But the thing is, if a private company or a non-profit organization faces a D&O claim, it can be totally devastating and wipe your organization out.
3. It’s not a contractual obligation; it’s a selective purchase. While it may not be a contractual requirement, purchasing management liability insurance is “a good trade” for small businesses, both private and non-profit. The way the US legal environment is trending today, with settlement costs skyrocketing, a $3,500 premium policy can be the difference between a small business surviving or sinking after a management liability claim. There’s a huge uninsured population of private companies and non-profit organizations in the US. Furthermore, if they’re really small companies (which a lot of private companies are) they can often get a little bit of management liability coverage in their business owners’ policy but often it’s not really a sufficient limit and the coverage isn’t broad enough.
4. Don't understand it or its value. There’s sometimes a bit of mystery around management liability – not just around the intangible nature of what it covers, but because most brokers haven’t made it easy for insureds to pick up a management liability policy or a D&O policy and understand what they’re reading. At PeoplesAlly, we are simplifying our product offerings and making our policies easier to read and understand.
What is Management Liability Insurance?
It is an insurance policy specifically designed to cover management liability and picks up when General Liability policies leave off, protecting businesses and key officers against claims along with associated expenditures.
Management Liability is a combination of three different types of insurance: Directors and Officers (D&O), Employment Practice Liability (EPLI), and Fiduciary Liability Insurance.
Directors and Officers (D&O): D&O coverage is a type of liability insurance specifically made to protect directors and officers of non-profit, for-profit, and privately held businesses for liability that might arise while managing the business. Some of the risks covered include negligent acts, failure to comply with regulations, omissions or misleading statements, and other related risks.
Employment Practice Liability (EPLI): EPLI provides protection for the company, the directors, officers, and, employees for claims made pertaining to wrongful acts and issues arising from employment practices. Most claims covered include harassment, discrimination, termination, and retaliation.
Fiduciary Liability Insurance: This type of insurance protects businesses against fiduciary related claims due to the company’s mismanagement of employee benefit plans. The amount of risk associated with fiduciary roles is heightened by potential lawsuits filed against a fiduciary or trustee without complete evidence of wrongdoing, unleashing an expensive court fight that can place your personal assets at risk. Your house, your savings, and even your future earnings could be at stake without Fiduciary Liability coverage.
Advanced e-Financial Technologies, Inc. (AeFT) d/b/a PeoplesAlly Insurance Services is an online broker of insurance products and services. Policies are underwritten by third-party insurers (“Insurers”) that are not affiliated with PeoplesAlly Insurance Services. The insurers are solely responsible for future claims. PeoplesAlly does not underwrite any insurance policies as described on this site. Additionally, any insurance policy premium quotes or ranges displayed are non-binding. The final insurance policy premium for any policy is determined by the underwriting insurance company following application.
The information provided on this website does not constitute insurance advice. All content and materials are for general informational purposes only. Please complete PeoplesAlly's online application and contact one of our licensed insurance professionals to obtain advice for your specific business or personal insurance needs.
PeoplesAlly's California Agency DOI License is #0I49893.
2901 W Coast Hwy, #200
Newport Beach, CA 92663