Everyday business relationships and management activities carry the same amount of risk as running a heavy piece of machinery or large construction vehicle. The nature of the risk is different, but there is an inherent risk just the same. Corporations, along with the directors and officers, often secure multiple insurance policies to help offset the costs of the liabilities these numerous risks pose. Management liability is the comprehensive term used to describe the variety of policies generally included in a corporate-need insurance package.
Directors and Officers Liability
With D&O insurance, the directors and officers of a corporation are personally protected from financial loss that could arise from litigation against the individuals. Should a client allege a wrongful act against a member of the board or stemming from the actions of the board, the insurance policy covers the cost of the defense and potential settlement awards. The finances of the individuals (s) accused aren’t personally jeopardized.
Any kind of supervision over an employee benefit plan and investment accounts is open to accusations related to fiduciary liability. Claims over negligence or wrongdoing with regard to disability benefits, profit sharing, medical or life insurance, and retirement plans can be taken care of through fiduciary coverage.
These two areas are key risks for corporations and overseeing management. Insurance coverage provides some financial protection, but risk management strategies should be in place to further reduce liability.