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The Need for Company Directors Liability Insurance

Big-dollar payoffs make the headlines with regularity, spinning tales of directors and officers who have made what has been judged a wrong move and will pay a hefty price for doing so. It doesn’t matter how large or small your business is, and it doesn’t matter whether your firm is privately held or publicly traded – company directors liability is a real risk for officers and directors who could be targeted by claimants for their management decisions or handling of company matters.

 

So what’s a suit all about?

 

As leaders of the organization, directors and officers face claims from a dizzying variety of situations levied by both employees and customers, including:

  • Employment practices (such as wrongful termination or discrimination)
  • Failing to comply with workplace laws
  • Misrepresentation of company assets
  • Misuse of company funds
  • Fraud
  • Employee piracy

 

Industry expert says that not purchasing a policy is “foolish”

 

Confirms the head of an insurer that writes these policies, the risk of a professional liability claim extends to companies of various sizes, and a company’s directors and officers can be sued personally even if the company doesn’t have shareholders. It’s important to keep in mind that these claims are generally not covered under one’s general liability or even umbrella policies, which typically exclude protection for claims involving management liability.

 

Some firms assume that the coverage would break the bank. Of course, they aren’t thinking of the six – or seven – figure payout that could be the outcome of a lawsuit. That’s what one small Los Angeles-based company thought; with fewer than 20 employees and just four officers, they believed they were too small an outfit for coverage and that even if they did look for it, the policy would be too expensive. Fortunately, they contacted a professional insurance agent, who found company directors liability coverage from a top-rated insurer for less than $2,000 annually. The move proved to be perfect timing, as a claim was filed against one of the senior officers alleging wrongful termination just months after the coverage was purchased.

 

If your firm lacks this important protection, don’t hesitate to call an agent today to obtain a free quote for this and other very necessary business protection.

 

Public Liability and Professional Indemnity Insurance: What is It and Who Needs It?

Public Liability and Professional Indemnity insurance are types of liability insurance, with some differences. Both policies provide coverage for acts of negligence in the event of harm to a third-party. The main difference between the two is that professional indemnity insurance is usually carried by a firm serving in an advisory capacity to its clients.

Public Liability Insurance

This coverage protects businesses against financial loss in the event of being held liable to third-party for injury, death, or loss or damage to property resulting from negligence. An example of a claim that might be filed under a Public Liability policy is a case where customer trips in your store over some stock that was left in the aisle.

Professional Indemnity Insurance

This type of liability insurance covers professional negligence in providing advice to a client that in their financial physical or material loss. An example of a claim under a Professional Indemnity policy would be where a real estate agent is sued for failing to disclose defective conditions on a property prior to the closing.

Who Needs Public Liability and Professional Indemnity Insurance?

All businesses who interact with the public in any way should consider carrying liability insurance. This would include advisory-based businesses, businesses with company vehicles, retail businesses, contractors and other businesses that deal with customers. A licensed insurance agency that specializes in the area of business insurance can help ensure that you choose the right insurance for your company.