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CNA Blog — From the Experts
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CNA Blog — From the Experts

Published Tuesday, August 18, 2020

Management Liability Coverage: An Underused, Overlooked Lifesaver

Companies want to focus on hiring talented employees, appointing new executives and expanding operations, not on wrongful termination, breach of fiduciary duties, or unintended errors by directors and officers. The fact is, management liability exposures for many private companies and nonprofits can place an entire organization at risk.


And while firms may underestimate their level of risk exposures or believe that only certain types of companies need full coverage, the claim data indicates otherwise. Consider these recent incidents reported to CNA:

  1. A fraudulent employee made up several nonexistent “ghost workers,” then spent the next three years collecting their “pay.” By the time this embezzler was caught, the company had lost nearly $1 million.

  2. A construction company created a written sexual harassment policy with a clear reporting procedure – but only shared it within their home office. When road crew laborer alleged that her supervisor’s sexually explicit comments created a hostile work environment, the matter was settled for an amount in the low six figures.


Since each company had purchased a Management Liability policy, these situations ended with a positive outcome. Without this coverage a large claim could be devastating to their operations. 


Some companies may overlook their executive-level exposures, or mistakenly believe these risks are covered by existing insurance or have trouble understanding the complicated language of some insurers’ policies.


To address these challenges, CNA created Epack 3, a first-of-its-kind modular management liability policy designed to simplify the insurance process and minimize coverage gaps. With coverage options that work together and don’t overlap, Epack 3 gives you the flexibility to design the right solution for your clients using the following optional coverage parts:


Directors & Officers (D&O) insurance to mitigate risk for directors and officers and their companies, helping safeguard against claims by competitors, shareholders and regulators;


Employment Practices Liability (EPL) insurance to address issues arising from internal practices and procedures, such as discrimination, harassment and wrongful retaliation;


Fidelity and Commercial Crime insurance to help address losses stemming from employee dishonesty, forgery, robbery or other specified criminal acts;


Fiduciary Liability insurance to address exposures involving fiduciary duties arising from the administration and management of employee benefit and pension plans; and


Kidnap, Ransom and Extortion insurance to reimburse losses due to security incidents including kidnap or extortion for ransom, hijack, detention and political threat. Coverage may also include threats without associated ransom demands, travel or expatriate evacuation, workplace violence, and child abduction and disappearance.


For businesses and nonprofits of any size, the biggest advantage of management liability insurance is the improved peace of mind it provides to the executive team. By helping your clients understand and address their management liability risks, you’ll allow the directors and officers to focus on moving their organization forward – not worrying about whether a large claim could force it to shut down.


Learn more at our Management Liability page, or contact your local agent to discuss how Epack 3 could benefit your organization.



One or more of the CNA companies provide the products and/or services described. The information is intended to present a general overview for illustrative purposes only. Read CNA’s General Disclaimer.
One or more of the CNA companies provide the products and/or services described. The information is intended to present a general overview for illustrative purposes only. Read CNA’s General Disclaimer.
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