In today’s business environment, it’s essential to identify and address your company’s vulnerabilities. Most business owners are aware of the need to safeguard capital assets like real estate, vehicles, and equipment, but how are you and your company management and Board of Directors protected against litigation. Does your insurance program include Professional and Management Liability in addition to typical General Liability? 

Fortunately, a variety of Professional and Management Liability options, many tailored to specific industries, are available to protect you from lawsuits from advice given and work performed for clients, employment practices, policies and oversight of Directors.  These lawsuits are more and more prevalent today and costly to respond to.   

Professional Liability Insurance

Professionals who perform very specific and highly skilled jobs (like physicians, attorneys, accountants, and realtors) have always been vulnerable to lawsuits from patients and clients who may suffer consequences from the work.  Professional liability insurance (PLI) acts to protect from such claims of negligence or omission. But today, it is not just traditional professions that have significant risk.   

The reality is that more and more businesses provide services that can result in financial loss to their clients. Our economy has moved in significant ways to an advice and outsourced economy and that has broadened the need for many to have Professional Liability.  The technology field, for example, is a driving force of the day-to-day work of a majority of internal employee productivity, supply chain, e-commerce and payment functions in our country.  Mistakes, improper advice, or lack of prompt action can result in financial losses to the clients of technology firms like never before.  When clients lose revenue, reputation or results, they often look to their vendors to make them whole via lawsuits.     

PLI policies are designed to respond but are different than other insurance policies.  They are known as claims-made basis, which means the policy responds when the claim is made, not when the incident occurred.  These policies are not standard, so it is important that the services and advice provided are anticipated in the policy.  And defense costs may be covered as part of the policy limit or in addition to the policy limit; the latter being preferable, of course.   

Bottom line, if you are in the service industry, and haven’t discussed how you may be at risk in this area, you should.  Like most insurance policies, the risk of financial loss to your business could be significant, and you want to be sure the response and defense costs from a potential lawsuit are paid by an insurer, not you.  

Management Liability

Directors and officers liability insurance (D&O insurance) is focused on the acts of management from legal actions as a result of their role in the company.

A D&O policy protects your corporate officers in the event the company is sued for breach of fiduciary duty, misrepresentation of assets, misuse of company funds, fraud, intellectual property theft, or failure to comply with laws governing workplace behavior and performance.  But like Professional Liability, the breadth of potential lawsuits have broadened and the broad category of coverage has been renamed Management Liability as it may include Employment Practices Liability, Crime and Fraud, and other specific Fiduciary Liability.  In short, it protects management (internal and external) in a variety of ways. 

Has your workforce been altered by the COVID-19 crisis? If so, simply placing renewals on your existing D&O policy may not be enough. It’s advisable to review your D&O policy limits with an independent agent with access to many insurers to ensure that you’re not leaving your business open to unnecessary risk. 

At MAGIS, we know how hard you’ve worked to grow your business. That’s why we offer a broad range of policy options (including both Professional and Management Liability policies) 

Don’t leave the future of your business to chance. Contact MAGIS today. We’re looking forward to hearing from you!