Actors dream of playing a leading role that will put them in the spotlight. Unfortunately, business managers may also find their actions putting them in the spotlight – the legal spotlight. That’s because market-driven decisions, such as downsizing a workforce, can lead to management liability lawsuits. But with Private Choice Encore from Hartford Financial Products, managers of midsize businesses have a complete package of protection that can help save the show.
Private Choice Encore combines four important management liability coverages into a convenient, all-in-one package. These four coverages are: Directors & Officers and Entity Liability (D&O), Employment Practices Liability (EPL), Fiduciary Liability, and Miscellaneous Errors & Omissions Liability (E&O).
This package approach to management liability protection is one of many ways that The Hartford delivers greater value for agents and their customers. One of the key advantages with Private Choice Encore is that the product helps eliminate gaps that may exist if these same coverages were purchased separately from other carriers.
“If midsize business customers are buying D&O from one carrier, EPL from another and E&O from a third carrier, they could find unexpected gaps in coverage at the worst possible time,” says James Standish, Private Choice product manager with Hartford Financial Products. “But Private Choice Encore is designed to eliminate potential gaps – because The Hartford is providing four coverages in one complete package.” This comprehensive design also helps to manage any of the potential E&O liabilities that agents may face, Standish says.
While such coverages as D&O or EPL may once have been thought of as ancillary or “luxury” items, they are now considered to be vital elements of a prudent plan of protection. “With the current downturn in our economy, business managers may be making many decisions that expose their companies to liabilities,” Standish says. In fact, one individual business decision (such as a workforce reduction), could lead to exposures under D&O, EPL and Fiduciary Liability at the same time.
Today’s highly litigious environment, coupled with the fact that many employees are now protected under a variety of federal legislation, means that management liability coverages are more important then ever before. Especially since these types of litigation can result in very direct consequences for business managers.
“If you’re the manager of a well-known local business, and you get involved in a wrongful termination suit – for example – your personal and professional reputation is going to be a prime target for public scrutiny,” Standish says. And while some insurance carriers may always decide to settle an EPL claim, even though the insured wants to keep fighting in court, The Hartford views its relationship with its customers as a partnership that hopefully will always result in a mutually acceptable means of disposing a claim.
“Our product does not include a ‘hammer clause’ (i.e. consent to settle) for its EPL, D&O and Fiduciary coverage parts,” Standish says. “We stand by our customers and our legal defense teams,” he says. “It’s the right thing to do, and it helps to discourage copycat claims that might be filed by other disgruntled employees.”
All of these advantages make Private Choice Encore the right choice for agents and their customers. But there are many other benefits, as well. As one example, limits of liability under Private Choice Encore can be customized to help businesses strike a balance between their risk appetite – and their budget realities. With this product, customers have the flexibility to:
- Choose between two, three or four coverage parts.
- Purchase a separate limit for each coverage part or a single aggregate limit for all coverage parts.
- Select the amount of limit for each coverage part.
In addition, Private Choice Encore features: subsidiary coverage (subject to a 25 percent acquisition threshold); worldwide coverage; no mandatory arbitration provision; coverage for controlled joint ventures; and punitive and exemplary damages coverage (with “most favorable venue” provision).
Here are more details about each of Private Choice Encore’s four management liability coverage parts.
D&O Coverage
- Derivative demand investigation costs coverage ($250,000 sublimit).
- $500,000 Side A reinstated limit for claims against managers (other than original claim), at no additional premium.
- Guaranteed IPO coverage quote.
- Optional entity coverage.
- Extended definition of claim.
- Generous carve-outs to the insured vs. insured exclusion.
- Final adjudication standard preserved in the fraud exclusion.
Employment Practices
As part of Private Choice Encore, the definition of Employment Practices Wrongful Act includes:
- Wrongful dismissal, discharge or termination.
- Failure or refusal to hire or promote.
- Sexual or other workplace harassment.
- Employment discrimination.
- Invasion of privacy.
- Employment-related defamation.
- Retaliation.
Fiduciary Coverage
- Extended definition of claim (including fact-finding investigations by the Department of Labor or the Pension Benefit Guaranty Corporation).
- ERISA section 502(i) and 502(l) penalties coverage.
- Waiver of the deductible for any claim that is finally resolved with no liability to the insureds.
- IRS voluntary settlement program coverage.
Miscellaneous E&O Coverage
- Extended definition of claim (including written demands for monetary or non-monetary relief, civil proceedings, and written requests to toll or waive a statute of limitations).
- Professional services defined in schedule.
For more information about Private Choice Encore, please visit the Hartford Financial Products Web site at: www.hfpinsurance.com/mm/ to obtain a specimen policy form and application.
