Whereas D&O insurance provides cover for any individual acting in a managerial capacity on behalf of the company, CLL (or Entity) insurance protects the company itself.
- What are corporate legal liabilities?
- What insurance can you get?
- What are the risks of not having CLL?
- Other types of business liability insurance
A company is a legal entity with a separate identity from those who own or run it.
In legal terms, a company is treated as a person, with the capacity to trade, to agree to a legally binding contract, to employ, to buy and sell property, to lend and borrow money, to sue and be sued, to be taxed.
In the eyes of the law, a company owns the rights and liabilities of a person.
Legal claims against a company are often made in tandem with claims against individuals within the company. It’s not always clear where liability lies, and appellants will want to cover all bases.
Corporate legal liability refers to the company’s responsibility for the actions of its employees or third-party agents, where the action is performed for the benefit of the company or is due to neglect or lack of responsible management.
CCL insurance covers the company for costs incurred in defending an allegation of wrongdoing. Broadly, these costs include:
- Legal fees
- Investigations and expert witnesses
- Settlements, fines, and awards
Liabilities include (allegations of):
- Corporate identity crime
- Breach of data protection
- Health and safety breaches
- Tax crimes
- Libel and slander
- Breach of contract
- Unfair dismissal
- Breach of the Companies Act
- Breach of fiduciary duties
- Infringement of copyright
- Employee dishonesty
- Breach of warranty
- Breach of industry regulations
The level of cover available is varied, so a policy can be tailored to a company’s needs, based on size, activity, and perceived risk. However, the limits of CLL cover are linked to a company’s turnover and claims history.
Of the (approximately) 2,000,000 actively trading limited companies in the UK, more than 90% are SMEs, and just under half of them employ only the owner(s). The fate of the company, therefore, has a direct impact on the owners. If a company takes a financial hit as the result of legal action, the individuals who are invested in the company will suffer the consequences as though they, personally, had been sued.
- EPL cover offers protection against alleged breaches of employment law – for example, unfair dismissal, discrimination, or harassment.
- Directors’ and Officers’ (D&O) insurance covers the costs of defending cases brought against individuals who take a managerial role within the company.
Other business insurance policies include:
- Commercial property insurance
- Public liability insurance
- Employers’ liability insurance
- Commercial motor insurance
- Professional indemnity insurance
- Cyber insurance
- Commercial combined insurance
To talk to us about corporate legal liability insurance, please don’t hesitate to call our team of experts on 01223 324233.