Management of Companies

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How the Management of Companies and Insurance Connect:

Those responsible for the management of companies are in a unique position. Much of this is because this industry does not produce any goods or provide any services. However, as a management company often holds a majority share of stocks in different companies, the associated benefits (and risks) reside in the stock market. Although the purpose of the company is to limit certain risks associated with direct business ownership, these businesses are not wholly hazard-free ventures.

Owners and operators who specialize in this industry are typically aware of the risks involved with managing a majority of the shares in different companies. With the ability to decide on the direction of owned companies, directors and officers in this industry must be conscious of what problems may arise as a result of that authority.

There are a limited number of insurance needs that are particular to management companies. We can help owners and managers of these companies better understand their insurance product needs. Read on to discover the specific insurance needs of this industry.

Who Needs Management of Companies Insurance?

Any company registered as an LLC or LLP, and that owns other companies as wholly owned subsidiaries, should purchase insurance products related to the industry. Defined as holding companies, businesses in this industry who need insurance can include:

  • Banking organizations
  • Entertainment or Media organizations
  • Food industry organizations
  • Brokerage firms

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CoverWallet's Insurance Checklist , you'll find a list of insurance types needed for your specific business or industry.

What Insurance Does the Management of Companies Industry Need?

Several insurance products can cover the needs of a company in this industry. Given the exact nature of the holding, insurance products are limited but still important.

EPLI

Insuring Against Employment Complaints:

Employment Practice Liability Insurance, or EPLI, is important for any company that hires (and fires) employees on a regular basis. A business may see its size grow as a result of increasing its shares and portfolio of other companies. As a result, protecting against issues of discrimination in the hiring process becomes increasingly important.

You’ll Need This When…

A holding company will need this type of insurance from the moment it hires its first employee.

For Example…

If you interview several individuals for a position and decide not to hire any of the potential candidates, one or more of those rejected may sue your company. The rejected candidates may claim that you failed to hire them as a result of discriminatory hiring practices. Even if this is a false claim, you will still need to pay to represent yourself in court and prove your company’s innocence. EPLI provides legal defense and other services, including risk management.

Business Owner Policy

Covering a Range of Possible Needs:

A Business Owners Policy, or BOP, is a packaged deal and combines the features of several different insurance products, including General Liability and Property Insurance.

The General Liability feature will insure against such things as:

  • Personal injury
  • Property damage

The Property Insurance feature of this policy will insure against:

  • Damage to your physical business
  • Damage to the physical assets owned by your business
  • Property loss due to fires and some natural disasters
  • Income loss due to loss of property
You’ll Need This When…

Your business has a physical location and multiple employees. While some companies may be small, most are relatively large operations with a significant number of employees working from a central office.

For Example…

If a manager of one of your wholly owned subsidiaries is injured inside of your office due to an unmarked wet floor, he or she could sue for damages. The General Liability feature of a BOP could help insure against liability.

Directors and Officers Insurance

Insurance for Decision-Makers:

The primary function of this industry is to make decisions as the owner of other companies. A Directors and Officers Insurance policy is designed to help insure against claims that decisions coming from the head(s) of a company or organization were improper. D&O Insurance aims to protect directors and officers when claims against management decisions arise. The policy will typically cover damages when the directors are found at fault.

You’ll Need This When…

Businesses in the management of companies industry should consider purchasing this type of insurance at the start of the business. This industry involves decision-making authority. It is important to insure against claims of management errors early on.

For Example…

As these companies can themselves operate as investment vehicles, decisions made by the board of directors could see shareholders sue the company for judgment errors. This is particularly true if shareholders believe the company’s directors have not properly managed their holdings. D&O Insurance can help reduce liability in this and similar instances.

Additional Insurance Types to Consider

  • Workers Compensation: When your company decides to hire employees, you may need to purchase Workers Compensation Insurance. This insurance protects your company and your employees in the case of a workplace injury, providing financial assistance to an injured employee. In some states, you may be required to purchase this type of policy when you employ as few as 2 or 3 individuals. Even a management company, which is often designed as an LLC or an LLP, will need to comply with this practice in most states.
  • Cyber Liability: Any company with information or data housed either in on-site or off-site (cloud) servers needs to purchase Cyber Liability Insurance. The management of companies industry, in particular, may be at risk of cyber attacks, seeking to steal valuable financial information and data. Cyber Liability Insurance should help insure against claims when and if this situation arises.

How Much Does Insurance Cost?

The management of companies industry insurance costs will depend on several factors. This can include how many shares your company owns, how many individuals your business employs, where your company operates and several other areas related to your business operations. Get a quote to get a better idea of the cost.

Do you need more coverage?

Ocean Marine

This insurance protects cargo, vessels and other items that are being transported over water. The vessel owner and the cargo owner are covered under this type of insurance.

Equipment Breakdown

This insurance protects a broad range of equipment against breakdowns caused by motor burnout, power surges, boiler malfunction, and operator error. Equipment Breakdown covers the cost to replace or repair the damaged equipment, as well as other expenses incurred due to the damaged equipment.

Garage Liability

Small businesses in the auto trade industry need Business Garage Insurance to protect them from a variety of risks, including injuries, mistakes or property damage.

Employee Benefits Liability

This plan covers an employer in the event of an errors or omissions claim from an employee around a benefits plan. Errors and omissions covered in this plan can include failure to advise an employee of benefits they are entitled to, failure to enroll an employee, and giving incorrect advice in regards to benefits.

Liquor Liability

Any business that sells or serves alcoholic beverages can be held liable for damages or injuries caused by an overserved patron. This can include damages that result from fights, careless behavior or automobile accidents. While it may seem unfair to hold the business responsible for the acts of an unruly and intoxicated patron, establishments are held liable and can be sued for large sums of money. Fortunately, with a good Liquor Liability policy, businesses are able to protect themselves should things get out of control. These policies are sometimes bundled with a General Liability policy, but are most often purchased as standalone coverage.

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