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Management Liability

Management Liability Insurance Matters For Your Ohio Business (and Beyond): Here’s Why

March 27, 2024

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Running a small or mid-sized business in Ohio is no walk in the park. You wear many hats, constantly juggling tasks and making decisions that impact your company’s success. But what happens if those decisions lead to an unforeseen lawsuit? This is where Management Liability Insurance comes into play. There are typically 5 areas of coverage available in our management liability plans which include Directors & Officers Liability (D&O), Employment Practices Liability (EPLI), Fiduciary Liability, Commercial Crime coverage, and Cyber Liability coverage.  

While Hitchings Insurance is proud to serve Ohio businesses, this crucial coverage is equally important for our clients across Indiana, Michigan, Kentucky, and Pennsylvania. 

What is Management Liability Insurance? 

Imagine this: a disgruntled employee sues after a termination, an investor claims mismanagement, or a client alleges a breach of fiduciary duty. These are just a few scenarios where Management Liability Insurance can be a lifesaver. 

This insurance safeguards your company’s directors, officers, and managers from personal financial ruin if they are legally liable for a wrongful act in their decision-making capacity. It covers legal defense costs, settlements, and judgments associated with lawsuits alleging: 

  • Breach of Fiduciary Duty: This occurs when a leader prioritizes personal gain over the company’s best interests. 
  • Mismanagement: Allegations of negligence or poor financial decisions that harm the company. 
  • Employment Practices: Wrongful termination, discrimination, or harassment claims against employer from employees.  
  • Securities Fraud: Misrepresentation of financial information to investors. 
  • Cyber Incident: Losses against cyber-crimes committed against the employer, data breach’s, malware hacks, cyber bricking, & ransomware are all things that can happen to a business.  
  • ERISA Crime: Social engineering fraud or theft against the companies 401k or benefits plans.  

Why Is It More Crucial for Small Businesses? 

You might think Management Liability Insurance is only for large corporations. However, small businesses are often even more vulnerable to lawsuits. Here’s why: 

  • Limited Resources: A small business can’t afford a lengthy legal battle. Even a frivolous lawsuit can drain your finances and divert focus from running your business. 
  • Increased Scrutiny: Regulatory environments are constantly evolving, and compliance breaches can lead to legal action. 
  • Greater Exposure: Social media and online reviews can amplify disgruntled customer or employee voices, potentially leading to litigation. 

Benefits of Management Liability Insurance 

Hitchings Insurance strongly recommends Management Liability Insurance for all our SMB clients, whether that’s a company with one owner who makes all of the decisions, or a complex organization with multiple acting boards of directors.  

Here’s how it benefits you: 

  • Financial Protection: It covers legal defense costs, settlements, and judgments, shielding your personal assets. 
  • Peace of Mind: Knowing you’re covered allows you to make confident decisions without the fear of personal liability. 
  • Attracts and Retains Talent: D&O insurance shows potential hires you prioritize good governance and are committed to protecting your leadership team. 
  • Improves Risk Management: The insurance carrier often provides risk management resources to help you avoid claims in the first place.  

Coverage Limits:  

How much management liability coverage does a business need?  

This really depends on the type of industry you’re in, and what the overall business exposure is. There are federal mandates to coverage limits for line items like ERISA, while other coverage limits are purely up to the individual organization to determine what’s at risk. We’ve seen Managment liability limits as low as $1,000,000 up to as high as $15,000,000. A due diligence process by our licensed agents can come up with the correct amount of coverage needed for your business.  

Considering Management Liability Insurance? 

Here are some key factors to consider when getting a quote: 

  • Industry: Certain industries face higher litigation risks. 
  • Company Size: The number of employees and annual revenue can affect coverage needs. 
  • Limits of Liability: This dictates the maximum amount the policy will cover. 
  • Deductible: The amount you pay before the insurance kicks in.

Get a Quote Today! 

At Hitchings Insurance, we understand the unique challenges faced by SMBs in Ohio, Indiana, Michigan, Kentucky, and Pennsylvania. Our experienced agents can help you tailor a Management Liability Insurance policy that fits your specific business needs and budget. Don’t wait for a lawsuit to happen. Contact us today for a free quote and ensure your leadership team can make strategic decisions with confidence. These policies often cost much less than you think, we partner with solid carriers like Cincinnati Insurance, Travelers, and Chubb to provide comprehensive options at a price point that can’t be beat.

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