Director's and Officer's Liability
Are You Protected as a Business Owner/Manager?
Have you ever had a disgruntled employee? Have you, or a staff member, ever sat on a board of directors for a non-profit charitable group, professional association or networking group? Have you ever faced a competitor, client or employee who felt you had misrepresented yourself or your firm? If you have answered yes to any of these, than you have been exposed to financial loss.
Encon’s Private Plus, "Management Liability" package has been designed to provide coverage against these types of claims. The common myth about D&O insurance is that it only applies to large businesses with shareholders and boards of directors. In fact, only 18% of all claims are shareholder driven. The remaining 82% of plaintiffs include employees, competitors, customers and clients, prior owners, contractors, creditors, government agencies and regulatory bodies.
The major areas of coverage are as follows:
Directors and Officers Liability:
- This provides coverage for directors and officers (a term which can often be synonymous with owner and manager) against the following allegations: inducing breach of contract, tortious conspiracy, defamation, misrepresentation, non-disclosure, breach of duty of care, and bankruptcy related claims.
It is important to note that a director and/or officer may be held personally liable with respect to the aforementioned allegations. This coverage extends to them personally as well as the corporate entity in such claims, and will cover related defense costs for both the individual and company.
Non-Profit Outside Directorship:
- This covers any director, officer, or employee who sits on any non-profit organization’s board of directors, provided the position is being held at the request of the company. This could be a charitable organization or it could be a non-profit industry association.
Employment Practices Liability:
- Employment related allegations make up a large portion of D&O claims and include, wrongful termination, demotion or failure to promote, discrimination, harassment, employment-related misrepresentation, wrongful discipline and retaliatory treatment.
- This area also covers third party claims alleging discrimination or harassment.
Fiduciary Liability
- Coverage is afforded for claims regarding management or administration of your company’s benefits plan including its pension, medical and dental plans.
So while it is true that a bigger company makes for a bigger target, a small firm is still just as susceptible and in most cases has less resource to work with through these sorts of allegations, regardless of how groundless they may seem. The reality is that a large portion of these claim pay-outs are defense related costs which alone, can have a significant impact on a firm’s cash flow.
Whether you own a business, manage a business, sit on the board, or are a major shareholder, it is in your best interests to insure your business and yourself properly with Directors and Officers insurance.
Call Mumby Insurance Brokers for a comprehensive review of your operations and present insurance coverage to determine if your Management Liability exposure is appropriately insured.
** The information provided herein in intended to provide general information and not to replace the professional advice of your insurance broker. Should you have questions pertaining to your specific needs, please contact our office