Professional and Management Liability Risk Types

Insurance Coverage

Directors & Officers Liability and Entity Coverage (D&O)
Protects the financial assets of the company and the directors and officers against lawsuits.

Typical Risks of Emerging Companies

  • Emerging companies, often backed by venture capital have increased risk for claims by minority shareholders in connection with a merger or sale agreement.
  • Successful companies can trigger lawsuits from early or prior stakeholders in the company disputing their payout relative to other stakeholders.
  • Hiring employees from a competitor could attract lawsuits from that competitor.
  • Companies being acquired are at risk for lawsuits alleging misrepresentations in the purchase and sale agreement.
  • Earn-out agreements in acquisitions can lead to legal disputes over the calculations, or performance metrics.
  • Difficulties in valuing a company can raise the risk of legal disputes over valuation of liquidity of stock, particularly with employees for whom the company stock represents a significant portion of their compensation.

Employment Practices (EPL)
Helps protect companies from employment related risks.

  • There is a growing awareness of sexual harassment issues in many industries.
  • Growing companies may have limited human resources infrastructure, which may make it more vulnerable to employment practices lawsuits.
  • Gender and age discrimination are noted challenges for some industries.

Errors & Omissions (E&O)
Provides coverage for allegations of errors, omissions or negligence in providing services to others.

  • Customers may allege a defect exists in your product or service, or the product or service fails to perform in accordance with the terms of an agreement.

  • Failures in products and apportioning liability may require costly expert analysis.

  • Defense expenses may compromise a large portion of E&O lawsuits.

Media Liability
Provides coverage against lawsuits for copyright infringement and other media related claims for companies that produce, promote or publish content.

  • Producing, promoting or publishing media, advertising or other content exposes the company to liability risks.
  • Suits arising from mistakes such as misstating fact, exceeding the scope of a licensing agreement, or disparaging a competitor.
  • Even meritless lawsuits must be defended and defense expenses may compromise a significant portion of the costs.

Cyber Security
Provides liability (third party) and expense (first party) coverage for companies that collect, store or transmit private or proprietary information.

  • Many companies are prime targets for cyber-crimes, hackers, and former employees.
  • State agencies and the Federal Trade Commission have enforced laws and regulations requiring companies to protect consumer information, increasing risks for businesses.
  • More than half of all cyber breaches result from human error or system problems.