It is important for business owners to acquire management liability insurance to be covered in this increasingly litigious era. This article discusses some of the risks that such insurance cover would protect you from.
Employee Poaching Lawsuits
The business world is rife with scenarios in which employees are lured to move from one company to another. The entity that loses those employees to a rival can sue the firm that has employed those departed workers. Such lawsuits can be very costly, especially when you lose the suit and are ordered to make hefty payments to the company from which you lured the workers. Management liability insurance can help you to cater for those costs.
Employee Suits After Downsizing
You may restructure your company and layoff some of your employees during that exercise. Some aggrieved employees can go to court and file charges related to your actions. Such suits are especially possible in case you lack proper documentation of your employee recruitment practices, such as the circumstances under which you can terminate an employee's employment contract. Your company can end up collapsing if several employees sue and are awarded large settlements by the courts. Management liability insurance can save your company from collapsing under the impact of such suits.
Management teams can never be certain that they have put in place sufficient measures to prevent the situations that can result in a discrimination lawsuit against them. For example, someone may go to court and allege that you didn't promote him or her just because that individual is the youngest in the company. The legal fees associated with fighting such a claim can be so high that the other activities of the company can become underfunded. Discrimination suits can be based on religion, age, race, gender or any other protected category of people. Get insured so that you are covered should such a suit ever be filed against you or any member of your management team.
Sexual Harassment Claims
Don't imagine that your upright conduct and high moral values will protect you from being served with a sexual harassment lawsuit. Such allegations can be damaging to the reputation and finances of the company and the individual who stands accused. Management liability insurance can enable you to hire the best legal team to fight those allegations and bring the matter to a speedy conclusion.
It may not be a good idea for you to get management liability insurance as an extra (rider) on another policy that you have for your company. This is because you may have no cover in case other claims have drained the limit on the bigger policy that you obtained.