What types of insurance coverage do I need?

Liability Insurance

• Commercial General Liability (CGL) policies cover four types of claims: bodily injury resulting in actual physical damage or loss, property damage or loss, personal injury (including slander or libel), and advertising injury.

For covered claims, the insurance company pays damages, legal defense fees and settlement charges, up to the policy limits.

You might wish to purchase an Umbrella Liability policy to extend coverage well above the limits of your standard Commercial General Liability policy.

• Professional Liability – Professionals are expected to have extensive technical knowledge or training in their area of expertise. They are also expected to perform the services for which they were hired, according to the standards of conduct in their profession. If they fail to use the degree of skill expected of them, they may be held responsible for any harm they cause to another person or business. If you have a professional liability exposure, you should protect yourself with an appropriate policy.
• Employment Practices Liability (EPLI) – The number of lawsuits filed by employees against their employers is rising dramatically. While most suites are filed against large corporations, no company is immune.

EPLI provides protection against many kinds of employee lawsuits, including, but not limited to, claims of:

• Sexual harassment
• Breach of Employment Contract
• Discrimination
• Negligent Evaluation
• Wrongful termination
• Failure to Employ or Promote

The cost of this coverage depends on your type of business, the number of employees you have and various risk factors such as whether your company has been sued over employment practices in the past. Typically, policies do not pay for punitive damages or civil and criminal penalties. Liabilities covered by other insurance policies such as workers compensation are excluded from EPLI policies.

• Directors & Officers Liability – Most directors and officers of emerging companies have a significant financial stake in the business. If the company is sold, or faces financial setbacks or irregularities, investors without representation on the board may well question the independence and decision-making of officers and directors.

Board members may also be at particular risk if they lack of experience with corporate governance. While most public company board members are highly experienced – having served either on multiple boards or as officers themselves – many private-company board members (if they are not professionals such as venture capitalists, lawyers, or accountants) have never served in this capacity before and have limited knowledge of their legal obligations. That’s a recipe for trouble!

Directors & Officers Liability insurance protects directors & officers against claims alleging loss arising from mismanagement. Wide holding of stocks and stringent standards imposed by courts indicate a growing risk. An outside directorship liability policy is available, as supplementary protection, to assure sufficient limits for the exposure created when a company’s director, officer or employee serves in an outside director position at its request.

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