Understanding Management Liability Insurance and Directors & Officers Insurance

Just a few years ago, only a few small or medium-sized businesses secured themselves with financial lines insurance or insurance policies that cover financial losses and other costs. With more and more companies facing litigation and similar risks, it has become apparent that there is a need to have one.

There are several kinds of financial lines insurance, but the most notable ones are Management Liability (ML) and Directors & Officers (D&O) Insurance as they protect a business from the failed responsibilities relating to management. 

The Difference between Management Liability and Directors and Officers Insurance

People often interchange ML and D&O insurance; however, the two offer different solutions. 

ML is much broader. It used to be an offshoot of the D&O insurance, but it eventually made a name of its own. It can cover a wide range of management risks, including D&O itself. It is specifically designed for small to medium-sized enterprises (SME) because it packages together coverage for management catastrophes and common business risks related to it. Essentially ML covers all damages and claimant costs awarded against you, legal and investigation costs incurred, fines, and penalties.

To be more specific, ML can cover the following things:

• D&O cover
• Company liability
• Employment practices liability (this is a loss arising from claims brought by past and present employees alleging discrimination or harassment)
• Crime loss and investigation expenses
• Tax audit expense 
• Pecuniary penalties are given to an insured person in the company
• Costs of representing the insured/company in investigations
• Costs of representing the insured at official inquiries

D&O, on the other hand, is intended for bigger corporate companies that have a lot of directors and officers. It can provide cover for those accused of failing in their duties as directors and officers, both past and present. It is also an insurance that is essential for the benefit of directors and officers only.

If you have any questions about ML or D&O insurance, please don’t hesitate to contact us here at CIII Insurance Services. We can even provide you a quote for your reference or consideration. 

Remember, every business is different. This means that you face unique risks and challenges and it’s best if you get advice from a trusted insurance broker about the type of insurance solutions that will be perfect for you and your business.