Management Liability Insurance protects you and the company against the risks and exposures of managing and running a business.
It doesn’t protect your business for the ‘activities’ of the business like the products and services you provide or the quality of advice you give. It is there to protect you for everything management is responsible for when running the company or business.
It’s important for those who hold senior roles such as directors and officers to appreciate that they can be held personally liable for corporate liabilities in managing a company. This is why management liability insurance is so important.
Common management liability insurance claims
The most common management liability claims according to Austbrokers are made for:
- Breaches of director’s duties and/or fiduciary duties including breach of trust
- False, misleading and deceptive conduct by directors/officers and employees
- Actions alleging improper and illegal conduct
- Statutory breach of duty
- OH&S prosecutions
- Employment issues such as unfair or wrongful dismissals, discrimination, harassment, wrongful failure to employ or promote
- Defamation by directors or officers
- Breach of intellectual property rights by directors or officers
- Employee theft, including theft of money and property
- Taxation investigation costs
What does management liability insurance cover?
Management liability insurance is a packaged product and usually covers a range of liability risks.
It will normally include the following management liability risks:
- Directors and Officers Liabilities (D&O) such as fraud and insolvent trading.
- Employment Practices Liabilities such as discrimination and unfair dismissal.
- Statutory Liabilities such as Occupational Health and Safety penalties.
- Crime Cover to allow for theft or fraud by employees including theft of stock.
- Corporate Entity Liabilities including shareholder disputes and wrongful acts and fraud.
- Legal Representative Costs such as an ASIC enquiry.
In essence, management liability insurance covers the damages and claimant's costs awarded, legal costs for defence, investigation costs and civil fines and pecuniary penalties.
So for example, if a company was sued because it was claimed the directors had unfairly dismissed an employee, all legals costs, investigative costs and any damages would be covered under insurance.
If you’d like advice on the best management liability insurance options for your business, speak with one of our experienced brokers today.