This form of insurance fills some of the gaps left by CGL, Umbrella and D&O policies.
This type of insurance protects the entity (corporation), its directors, officers and employees if a claim is brought by or on behalf of a current, prospective or past employee for a broad range of allegations such as:
- Wrongful dismissal, discharge or termination of employment; (subject to the comments made about wrongful dismissal in the D&O notes, except that under this form the entity (corporation) is an Insured party and thus will receive indemnity for defense costs and damages over and above any compensatory award for the breach of contract). In case of bankruptcy some policies will pay for the actual contractual awards.
- Breach of any oral or written employment contract or quasi-employment contract;
- Employment related misrepresentation;
- Wrongful failure to employ or promote;
- Wrongful deprivation of a career opportunity;
- Negligent evaluation;
- Invasion of privacy;
- Employment related defamation;
- Employment related wrongful infliction of emotional distress
Claims are covered through:
- A written demand for monetary damages;
- A civil lawsuit commenced by the service of a complaint or similar pleading;
- An arbitration proceeding;
- A formal administrative or regulatory proceeding commenced by the filing of a notice of charges, formal investigative order or similar documents.
If the right type of CGL and D&O/E&O insurance is bought in a broad package, then the need for this specific form of policy is eliminated, but is becoming more difficult to manuscript CGL policies to pick up all of these exposures.