Non Compete Insurance?

[Playitsafe]

I was contacted by one of my clients who said he is in the process of starting a new company along with a couple of partners. One of the partners is currently working with a company in the same industry and has a non-compete clause for six months post employment. He doesn't plan on being actively involved in the new venture until the non-compete expires but they have been told by their lawyer that they should get a insurance policy in case his current employer believes he is violating his non-compete and takes legeal action. The company is located in NJ. Is anyone aware if this coverage exist and if so who offers it?
Thanks!

[gforaker]

My understanding is that non-compete contracts are unenforceable almost everywhere. You can have non-piracy or similar contracts with penalties, but you cannot take away a person's occupation. You, or better, he, should contact a local employment law attorney.

[jackwehoca]

Most of the time the only enforceable portion of a "non-compete" is the caveat protecting the former employer's "book of business"; that is, you are not allowed to solicit clients that are insured through the former firm. Any client contact must originate from the insured, not the agent.

[NYagent301]

Not sure exactly what your question is...

"told by their lawyer that they should get a insurance policy in case his current employer believes he is violating his non-compete and takes legeal action"

To me it seems management liability (D&O), but would probably not be covered if there is any knowledge of infomation that may give rise to a claim.

[gforaker]

Repeat after me, "Lawyers are not experts in insurance".

What kind of policy would cover an intentional act? Like I said, talk to an employment lawyer.

[OldIndyAgent]

Lawyers are not insurance experts but they are supposed to be contract experts of which, an insurance policy is a contract.

A non-compete may or may not be enforceable depending upon reasonability. It is reasonable to expect that a gas station manager would not take a job at a competing station next door. It is unreasonable to not let them take a job 5 miles away.

Also, accepting compensation ratchets up the enforceability.

gforaker gave good advice, see an employment attorney.

[Hirschinsurance]

I've never heard of any type of insurance coverage that would insure against a non-compete. As to the poster, who said non-competes are almost unenforceable anywhere. That couldn't be any further from the truth. Here in Texas, Texas law favors the employer and non-competes usually hold up, unless that plaintiff can show good cause that's it's limiting the person's ability to make any type of living. There are always exceptions, but non-competes are very commonly upheld under Texas law.

[Playitsafe]

Thank you all for your impute. From my experience non-competes are inforcable in NJ. After speaking with an underwriter a D&O policy seeems to be the best bet for having something that would respond to a claim by the prior employer. It would not pay if found they were in breach of the non-compete but would pay to defend.