Management Liability

Management Liability

Management Liability insurance includes the following coverage offerings:

Director and Officers Liability

In a directors and officers (D&O) liability claim, the assets of a company or organization’s board of directors and officers can be at risk. Whether your business is large or small, a lawsuit alleging a wrongful act can be filed by vendors, clients, employees, other companies, or government regulators against an organization’s board of directors and/or officers. D&O insurance covers defense costs and damages (awards and settlements),

Claim Scenario

An officer of a corporation had a meeting with a potential investor about the company’s future plans, including the launch of new products. Based on the conversation, the investor committed over $500,000 to the company. After a year, the products did not appear and the value of the original investment declined. The investor sued the corporation, its directors, and officers for misrepresentation, seeking over $10 million in punitive damages. After two years of litigation, a settlement was reached.

Employment Practices Liability

Employment Practices Liability (EPL) covers claims made by employees related to their employment. The most common types of claims include:

  • Allegations of wrongful termination
  • Sexual harassment
  • Discrimination,
  • Defamation,
  • Unfair hiring or firing practices,
  • Retaliation relevant to the employer-employee relationship

Other workplace-related areas that EPL coverage applies to:

  • Invasion of privacy
  • Failure to promote
  • Deprivation of a career opportunity
  • Negligent evaluation

Policies cover directors and officers, management personnel, and employees and include coverage for defense costs associated with responding to employment lawsuits.

Claim Scenario

The plaintiff alleges that her employment was terminated because she testified on behalf of another worker who brought a separate action against the company. The plaintiff alleges that this is a violation of her employment contract, which provides that she can only be terminated for good cause. Plaintiff asserts causes of action for wrongful termination, breach of contract and retaliation.

The settlement totaled $120,000.

Contact a CF&P professional to discuss EPL for your business.

Fiduciary Liability

If your company provides a retirement plan or a health plan (medical, dental, life and disability) to employees, and if you are involved in any way with managing that plan, then you can be considered a “fiduciary” and under the Employee Retirement Income Security Act (ERISA) can be liable for what happens with the plan.

A fiduciary liability policy protects the personal assets of a plan Fiduciary resulting from allegations of breach of fiduciary duties from retirees, or current and former employees. It covers:

  • Breach of fiduciary duties
  • Negligent errors and omissions
  • Improper disclosures to plan participants
  • Remiss investment advice
  • Imprudent choice of outside service provider (OSP)
  • Faulty advice of counsel
  • Improper amendments to plan documents

Many believe this is covered in their Directors and Officers Liability or Employment Practices Liability, but most of those policies do not include fiduciary liability exposure as well as exposure related to ERISA.

Who is a Fiduciary?

You are a “Fiduciary” if you:

  • Have any discretionary authority or discretionary control in managing the plan or who have any authority or control in managing or disposing of its assets
  • Provide investment advice for a fee or compensation with respect to any monies or other property belonging to the plan
  • Have any discretionary authority or responsibility in administrating the plan

Claim Scenario

A company’s health plan administrator failed to forward an employee’s medical insurance enrollment forms to the insurance company. Because the forms were required for coverage, when the employee required surgery a few months later, coverage was denied.

The employee’s attorney complained about the denial of benefits and demanded payment of medical fees of $250,000, the cost of surgery and post-operative care, plus reimbursement of attorney fees.

The case settled for more than $350,000, including attorney fees.


Even with the best internal safeguards in place such as background checks and audit practices, there are instances where employees engage in fraudulent activity.

Claim Scenario

An executive with full access to a company’s accounts might be giving himself unauthorized salary increases, bonus checks, and expense allowances, embezzling a total of $700,000. The fraud is discovered during a routine audit. The company’s crime insurance covers the loss.

Crime Insurance Coverage

Crime insurance provides coverage for embezzlement such as described above, as well as money or property losses due to dishonest acts by employees such as theft and forgery and alteration of outgoing checks.

CF&P will find the best crime coverage for your business to protect you from loss of money, securities, and property, as well as reimbursement for claim expenses.