A management liability policy, also called an “executive protection” policy, is a bundle of coverages designed to protect an organization, its executives, and employees. A management liability policy helps protect the organization when certain actions – right or wrong – are called into question.
You work hard to make your practice a success and to provide your employees with a fair and positive work environment. It can be challenging to keep internal policies and procedures up to date with laws such as the Employee Retirement Income Security Act (ERISA), American Disability Act (ADA), Family Medical Leave Act (FMLA), Consolidated Omnibus Budget Reconciliation Act (COBRA), Virginia employment law, and entities such as the EEOC and Department of Labor.
A management liability insurance policy offers you protection and the MSVIA is here to find the coverage that is right for you.
Employment Practices Liability (“EPLI”) – covers the organization against allegations such as wrongful termination, harassment, discrimination, payment disputes, violation of FMLA, etc. A policy with “third-party coverage” will cover allegations not just from employees, but from independent contractors, patients, and outside vendors.
Fiduciary Liability – covers the organization and the individual(s) with fiduciary responsibilities owed to the retirement (or benefit) plan participants and/or beneficiaries to act in their best interests. Fiduciary status is based on the person’s duties, not their title. Responsibilities such as choosing the investment firm, administering, or monitoring the plan and transferring/disposing of assets are considered fiduciary duties.
Directions & Officers Liability (“D&O”) – covers the organization and its directors, officers, and partners for allegations such as breach of contract, conflict of interest, using company assets for personal gain, misrepresentation, financial mismanagement, and lack of due diligence. Plaintiffs who may bring these suits can be competitors, lenders, suppliers, customers or other shareholders or employees.
The event that leads to a claim can often be unintended. Although losses happen infrequently, the costs can be high, and dealing with allegations is time consuming. There are no caps or maximums on damages.
Under ERISA, fiduciaries can be held personally liable for errors and omissions in administering plans. Even if many responsibilities are delegated to an outside investment firm, the organization and fiduciary are liable for the selection and continued oversight of that firm.
Smaller organizations may not have personnel dedicated to employee benefits or the resources to evaluate advice and service provided by outside plan providers.
EPLI policies also help insureds be proactive. Many insurance companies provide resources to policyholders at no charge – sample applications, exit interview forms, reprimand letters, employee handbooks as well as web-based training and articles.
MSVIA encourages practices to look into management liability policies. We would be happy to provide more information, or we can review the practice’s entire insurance program.