Management liability insurance is not something only large, publicly traded companies need. A business does not need shareholders for its executive management staff to be targeted in a lawsuit. While it’s true that privately held companies are not at risk of a class-action suit over securities, businesses that seek to fund from venture capital sources or another type of financial investor are at risk of a lawsuit. So are those with any type of relationship with clients or vendors.
Information Privacy Issues
One area of growing risk is information privacy, where identity and information theft are an increasing threat. Public concerns focus on how companies collect, store and use their personal data. Information privacy issues apply to a variety of sources, including:
- Financial transactions
- Healthcare records
- Web-surfing activities
- Biological traits and DNA
- Academic research
- Private residence location
Businesses develop workarounds that let them use data while safeguarding customer privacy. However, data protection and privacy laws change all the time, so staying current is important.
Protecting Managers’ Personal Assets
Management liability insurance, also known as directors and officers insurance, protects company leaders against claims that may arise from a data security breach or another event tied to their actions or decisions. If you are a managing executive, you should know that this insurance is usually in addition to a general liability or umbrella policy for the company itself and is something you should consider to protect your personal assets.