Understanding Management Liability Insurance

Running a business entails a multitude of responsibilities and decisions. Whether they are making strategic choices or overseeing daily operations, business leaders are exposed to numerous risks.

Management liability insurance covers the exposures that businesses and their leaders face. When used by privately-held firms, nonprofit organizations, and small, publicly-traded companies, the term refers to a package of different policy coverages.  When used by larger businesses, it generally refers to a single policy.

This article provides discusses the coverages generally included in a management liability insurance package and why each coverage is important for a business to have.

Coverage in a Management Liability Package Policy

The coverage in a management liability package varies based on the insurer.  But it typically includes directors and officers insurance (D&O), employment practices liability insurance (EPLI), fiduciary liability insurance and crime insurance.

D&O—This policy protects directors and officers against lawsuits filed against them for decisions or actions taken by them in their capacity as a director or officer. Examples of potential claims include reporting errors, misuse of funds, inaccurate disclosures, or other management errors and omissions.

D&O insurance safeguards the personal assets of directors and officers by paying damages, as well as the legal fees and other costs incurred in defending a lawsuit. In addition, D&O insurance may protect the business itself if it is also sued. A business must offer D&O coverage to attract executive and board talent.

EPLI—This policy protects against employment-related lawsuits, such as those involving allegations of discrimination, harassment, or wrongful termination. All organizations with employees are susceptible to these claims, no matter their size or their diligence and commitment to adhering to applicable employment laws. Having EPLI can help cover defense costs and legal expenses associated with these claims.

Fiduciary Liability Insurance—This policy protects an employer against claims for breach of fiduciary duty by mismanaging an employee benefit plan. The types of claims covered by fiduciary liability insurance include improperly changing plan benefits, mismanaging plan assets, wrongfully denying benefits or providing inaccurate plan advice.

Fiduciary liability insurance will reimburse an employee benefit plan for any financial loss caused by the fiduciary.  In addition, it will cover legal fees and other costs incurred in defending a lawsuit.

Crime Insurance—Even with robust security protocols and systems in place, businesses are still vulnerable to business-related crimes committed by employees. These can include theft, forgery, and embezzlement. Crime insurance can help provide financial assistance if those unlawful activities occur.


Management liability insurance can provide organizations and their leaders with essential coverage for the risks they face in running the organization.  Having the right coverage in place is an integral part of a risk management strategy.

Contact RMC Group today to speak with a licensed insurance professional at 239-298-8210 for more information or a quote.

This document is not intended to be exhaustive, nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice. © 2023 Zywave, Inc. All rights reserved.