So you may not know what a private company management liability policy is or what it’s intended to cover and why you might want one. In this piece, I’ll try to explain in layman’s terms what these policies are and why you should consider one.
The management liability policy is really just an industry name for a package policy that may contain one or more of the following: Directors and Officers Liability, Employment Practices Liability, Fiduciary Liability, Internet Liability and sometimes other coverage sections like errors and omissions or crime.
Now that you know that, let’s talk a little bit about why you might want to consider such a package, or any of the coverage forms. The first reason to consider this type of package is to protect your assets and those of your business. Typical liability policies will not defend or indemnify you for a lawsuit that does not allege bodily injury, property damage or personal injury, amongst some other types of claims. An example of a directors and officers allegation might be a breach of duty owed by a director, officer, owner of a private company. Allegations of misleading statements about a start ups financials where venture capital is being cultivated. Even lawsuits by creditors alleging the misuse of a private companies assets, so that creditors could not be paid.
Another coverage you an buy in this type of package is employment practices liability insurance. This type of insurance is meant to protect the directors, officers, managers and the business when sued by an employee or third party contractor, if that coverage is added. Types of suites you see that this insurance responds to include but are not limited to: age, race or religious discrimination by an owner, officer, director or manager. Harassment both sexual and otherwise, retaliation allegations and if endorsed wage and hour allegations can also be covered. Without this type of insurance, you will be paying several hundred dollars an hour for an attorney as well as the ultimate settlement or court verdict.
A third coverage part you can add to a management liability policy is called Fiduciary Liability. This is a coverage part intended to protect those same Fiduciaries as the other two for allegations around the disclosure, choice and administration of employee benefit plans including investment plans and pensions.
Many insurance companies also offer crime coverage in these packages. A business owner can buy higher limits of employee dishonesty, forgery, alteration, computer funds fraud and transfer fraud, social engineering coverage and more.
So, now that you know what’s available, and why you might want to consider these policies, how do you get quotes? We’ll, we can provide those and we use many different companies to do so such as: Philadelphia Insurance Company, Travelers Insurance, Chubb Insurance Companies, Cincinnati Insurance Companies, and access to many others as well.
In summary, even private companies have risks of lawsuit which can be covered. Many policies and companies are available to find the best fit to protect you and your assets. Call me or my agencies to find out more, or visit us online William A. Smith & Son, Inc.