Management Liability is the term used for coverages for claims arising out of an organization's business decisions. In addition to Directors and Officers Liability, these coverages include Employment Practices Liability and Fiduciary Liability. They can be packaged or written as separate policies.
These coverages can be the subject of many claims filed during the COVID-19 pandemic. For example:
- Failure to inform shareholders of COVID-19 effect on business.
- Default on payments.
- False reporting affecting share price.
- SEC and state regulatory actions for false or misleading information.
- Employee or customer claims for inadequate health and safety precautions.
- Anti-trust and consumer protection suits alleging collusion or price gouging.
- Class actions for recovery of tuition or fees
- Failure to comply with employment related regulations or statutes such as the WARN Act.
- Wage, hours, and employee benefit claims.
- Failure to institute adequate workplace policies and procedures.
- False Claims Act liability for improper requests for government assistance.
Organizations seeking coverage for these claims may find insurers deny them citing various exclusions:
- Bodily injury or property damage. The definition of excluded "bodily injury" may extend to mental anguish or emotional distress. Where possible, these exclusions should be narrow.
- Bankruptcy or insolvency The definition of insured should include bankruptcy trustees or receivers, debtors in possession and creditors' committees.
- Violation of specified statutes.
- Wage and hour claims are usually excluded, with defense covered with a sub-limit.
Even before COVID-19 Directors and Officers Liability premiums were rising. We can expect this to continue accompanied by coverage restrictions. Before renewing any management coverages, ask Beacon for a coverage review and if necessary remarketing to get the most favorable terms possible.