Life Science Insurance - Management Liability

What is a Management Liability Policy?
Management Liability can include several lines of insurance specifically designed to protect management in their day-to-day business decisions. Coverages intended to respond to claims arising from the numerous threats to companies and their management includes: Directors & Officers Liability, Employment Practices Liability, Fiduciary Liability and Crime coverage.

Directors and Officers Liability Insurance (often called D&O) is insurance payable to the directors and officers of a company, or to the corporation itself, to cover damages or defense costs in the event they are sued for wrongful acts while they were with that company.

Employment Practices Liability (often called EPL) is insurance that will help defend against employment-related claims such as sexual harassment, age discrimination, or wrongful termination.

Fiduciary Liability insurance covers pension fund trustees and retirement plan sponsors' directors and officers for claims asserting violations of fiduciary duty under the Employee Retirement Income Security Act ERISA.

Crime insurance as a general term can vary. Generally, Crime insurance protects organizations from loss of money, securities, or inventory resulting from crime. Common Fidelity/Crime insurance claims allege employee dishonesty, embezzlement, forgery, robbery, safe burglary, computer fraud, wire transfer fraud, counterfeiting, and other criminal acts.

What Limits should I buy?
There is no firm answer about how much management liability coverage a company should purchase. The goal is to try to purchase a reasonable amount of coverage based upon operations and perceived risks.

Why should I buy it?
There is often a misconception among directors and offices of privately held companies that they are somewhat insulated from management-related litigation because they are not as visible as their counterparts in publicly-owned companies are. But based on recent surveys and court decisions, the likelihood of a director or officer of a privately held corporation being sued has increased substantially.

The most important reason for directors and officers of private corporations to buy management liability insurance is to protect their own assets, since they can be held personally liable for their wrongful acts committed on behalf of the corporation.