Corporate Legal Liability Insurance (CLL) , otherwise known as Entity Insurance, is similar to Directors’ and Officers’ insurance (D&O) but offers protections to the company whereas a D&O policy offers protection to an individual.
CLL provides the funds to defend claims made against your company for a wide range of alleged wrongdoings and any associated settlements or awards.
Corporate legal liability insurance could be the difference between your company surviving, or not surviving, a legal claim.
S-Tech is a leading independent insurance broker and can offer your company impartial advice about the types of insurance your business needs and the appropriate levels of cover you should consider. We will work with you to ensure all relevant business risks are covered while providing a competitive service.
Corporate legal liability is essentially the liability a company may face for actions taken by the company itself, or its employees, that could be deemed unlawful. It can also refer to a lack of action – where the action was required to comply with the law.
A company would be found liable if these actions (or lack of action) were:
In these circumstances the company may be prosecuted.
Corporate legal liability insurance (CLL) can be used to not only defend these claims, but also cover the costs of investigations and any awards or settlements incurred.
A lot of Private businesses are owner managed. Directors and Shareholders are often the same. Consequently a loss to the Company might also be an indirect loss to the Directors. This is one of the main reasons why it goes hand in hand with Directors & Officers cover.
Often claims will be made against the company and the company directors. This may be because the claimants are not sure who to blame. CLL works alongside Directors’ & Officers insurance as part of a wider Management Liability policy to offer companies, their directors and employees with essential protection from claims made against them for perceived wrongdoings.
Corporate Legal Liability covers the costs associated with defending claims made against your company for a range of alleged wrongdoings such as:
Policies generally include:
It is important to note that corporate legal liability insurance provides indemnity for the company and NOT any named individual. With directors subject to unlimited personal liability it is important to have an appropriate Management Liability Policy in place.
Please note that this cover is not normally available for Public Companies as there is a divorce between ownership and control.
Corporate Legal Liability Insurance is not legally required, although for many companies it would be considered best practice.
D&O Insurance won’t cover claims against the company. It is solely for individual Directors and Officers. Most D&O policies however can be extended to cover the company.
Claims can be brought by anyone who has an interest in the company e.g. customers, employees, shareholders, investors, regulators etc.
There will be a limit to the cover an insurance company is prepared to provide, however there are different options for the level of cover you may wish to purchase. Generally speaking limits are linked to turnover and based on historical claims data to ensure cover is appropriate.
Contact us! We sometimes find policyholders hold off notifying because there hasn’t been a formal ‘claim’. Our advice is to engage with insurers as soon as you become aware as a situation could escalate to a claim. This is both to comply with policy conditions but also because insurers may be able to offer advice and support.