What is executive insurance?
Executive insurance is a group of coverage types designed to protect companies and leaders from various business risks. It usually includes directors and officers insurance and employment practices liability insurance. Directors and officers insurance, or D&O insurance, protects corporate leaders from claims made against them. Claims may include, for example, misrepresentation of company assets, misuse of company funds, or breach of fiduciary duty. Employment practices liability insurance, or EPLI, covers damages and legal costs resulting from employees who file lawsuits against the company. EPLI can protect management and companies in litigation involving wrongful termination, discrimination, harassment, failure to promote, wage and hour claims, and more.
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When do I need to be aware of executive insurance?
If you are a company executive or member of a board of directors, you could be held accountable for the consequences of your company's decisions. As an example, an employee might allege harassment or discrimination, or an investor may claim company officers didn't act in good faith. These claims are likely to be brought against the company and its leaders, putting at risk their personal assets or the assets of their spouses. Executive insurance can help reimburse expenses associated with judgments, settlements, and defending your lawsuit in court, whether your company wins or loses.
What is important to know about executive insurance?
The cost of executive insurance will vary from company to company. It is based on several different factors:
- You will pay more for executive insurance if your company has a history of management liability claims.
- The more employees your company has, the higher the cost of executive insurance, especially EPLI.
- A new business will pay more for executive insurance than a company with a proven history of financial stability.
- If your business is a high-risk industry, your executive insurance costs will be higher.
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