how to reduce your management liability exposure
When determining the type of management liability coverage your business needs, first look at what you have. Is your current insurance covering the aspects of your business that are vulnerable to claims against you and your business? Odds are, you may be missing something. Let’s unpack the different types of management liability insurance options available that help protect private companies from financial loss.
directors and officers (D&O) liability
According to Chubb, “costs to defend and settle D&O claims have increased by 90% since 2010.”
Directors, officers, C-suite, and other key executives make decisions every day that leave them vulnerable to legal liability risk. Directors & Officers (D&O) Liability insurance is designed to protect the people who serve as directors or officers of a company from personal losses if they are sued by the organization’s employees, vendors, customers, or other parties.
With this coverage, the executive’s personal assets are safe from a lawsuit. Their homes and accounts cannot be targeted during a lawsuit. This form of insurance is designed to cover any losses associated with the lawsuit, including legal defense fees.
employment practices liability insurance (EPLI)
EPLI coverage is designed to protect a business in cases of employee-related claims or lawsuits. Some examples of lawsuits EPLI protects against are claims such as:
- Wrongful termination
- Sexual harassment
- Mismanagement of benefits
- Breach of employee contract
For instance, if you hire an employee who quits and then decides to sue your business for something during their time as your employee, EPLI will cover the claim costs.
Those with fiduciary responsibilities are committed to putting another person’s best interest first. When an incident occurs where the administrator with a fiduciary responsibility to an individual does not act in accordance with that responsibility, a lawsuit may arise.
Fiduciary liability coverage deals specifically with employee benefit plan fiduciaries, and claims that they mismanaged plans or assets. This policy helps cover any legal defense or losses incurred when a fiduciary makes poor investment decisions, mishandles records, or is negligent in hiring plan service providers.
This coverage aims to protect plan administrators from being held personally liable for losses plan participants experience in regard to their retirement or health and welfare plans.
employed lawyers liability
Employers with in-house lawyers are open to potential lawsuits for legal malpractice from creditors, customers, competitors, shareholders, employees, and more. In a case where someone pursues a suit against your in-house lawyers, this liability insurance
protects your attorneys from claims of error or omission. It helps cover and protect those who legally cover and protect your business.
errors and omissions liability (E&O)
E&O liability insurance protects businesses against lawsuits claiming inadequate work, negligence, errors, or omissions. If your business has a client claiming you failed to explain a branch of their services correctly and they decide to sue, your E&O liability insurance would cover court and settlement costs.
Those who may consider E&O insurance include:
- Real Estate Professionals
- Any business that delivers any type of service, as part of a product or stand-alone service
Crime is unfortunately something business owners must be aware of and prepared for. Theft doesn’t happen on a schedule, so having processes in place that safeguard your company’s assets adds an additional layer of protection from this unpredictable circumstance.
Having coverage in place that safeguards your assets in case of fraud or embezzlement can cover the losses experienced and make recovering from those losses easier.
what coverage is right for you?
There are various options when it comes to liability insurance coverage options for your business. The insurance coverage you need depends on your unique business. All businesses do not need every type of insurance coverage, but having the right coverage can save your business from financial stress.
If you don’t know the right insurance coverage for your business and how much it will cost, take a look at one of our recent articles on how much you should pay to insure your business.