Businesses heavily rely on the people they employ in high places to act ethically and responsibly. Even in the best-case scenario, those company officials may be open to lawsuits. To combat the consequences of such lawsuits, companies purchase management liability insurance (d&o) that offers coverages in three ways.
The policy shields the officer from personal liability. This means anyone in a management position who is sued for actions taken in the course of business will not risk personal assets. This is especially important when trying to attract executives to the company who may be worried about the ramifications for their families should something go wrong at work.
Management liability insurance also protects the business from the actions of any of its executives as well. Because the business employed the person, many lawsuits will name the company in the legal action and could put business assets at risk.
Regardless of the merits of the case, defending a lawsuit can be costly with attorney fees, court fees, and other expenses paid out even before a judgment is rendered. A management liability insurance (d&o) policy will pay those expenses when related to the actions of any employee whose duties fall under the description outlined in the policy.
Companies need their executives to make good decisions and lead by example. When that doesn’t go as planned, proper insurance is essential.