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The Hartford Enhances Small, Midsize Business Management Liability Coverage

The Hartford has enhanced its private company management liability offerings with Private Choice Ovation, a package policy with updated and expanded coverage options designed to address emerging exposures facing business owners and management teams today.

“As small and midsize business owners navigate increasingly complex laws and regulations governing employment practices, data privacy and private securities, even the best-run organizations can be at risk of a lawsuit,” said Tom Tucker, senior vice president and chief underwriting officer for The Hartford’s Commercial Markets division.

Among the key areas of concern for business owners, according to Tucker, are allegations of violations of the federal Fair Labor Standards Act (FLSA). Wage-and-hour lawsuits filed against U.S. employers have been increasing for the last five years, according to Federal Judicial Center calculations.¹

“Wage-and-hour disputes are among the leading and fastest growing causes of employment practices liability claims today,” said Tucker. “Defending these types of allegations can cost an organization thousands of dollars and be detrimental to its business.”

Also, recent data privacy laws and the 2012 Jumpstart Our Business Startups (JOBS) Act have created additional coverage needs for private companies. As data breaches become increasingly common for businesses of all sizes, the costs to notify customers and other expenses can be particularly burdensome for smaller businesses. Similarly, the capital raising and reporting requirements of the JOBS Act legislation create additional liability related to privately held securities.

The Hartford has designed Private Choice Ovation to address these and other emerging exposures for private company management teams. Specific enhancements include:

• Coverage related to private securities fundraising techniques (“crowdfunding”) under the JOBS Act;
• Reimbursement for certain notification costs and other expenses associated with a data privacy breach; and
• Optional defense cost sublimit for certain wage-and-hour violations (available by endorsement).

The Hartford’s Private Choice Ovation offers a package of management liability coverages that can be customized based on the needs of the business. Management teams can select one or more of the following coverage parts: directors, officers and entity liability; employment practices liability; fiduciary liability; kidnap and ransom/extortion; and crime.