What is Management Liability Insurance?

When considering insurance for your business, the first things that come to mind are the tangible assets of the company. However, as a business owner or director making operational decisions day in, day out, what protection is in place to cover you as an individual? Whilst operating a business, there is a vast array of operating exposures, which if not adequately covered, could have crippling financial implications for your business, and you as an individual.

Management Liability Insurance is an efficient packaged suite of coverage for exposures faced by directors, officers, managers and business entities, generally in the SME market. It can prove a vital component in any business owners’ risk management toolkit and will normally cover the following risks:

Provides protection for directors & executive management of a business where you can be personally liable for any actual, or alleged mismanagement of the company whilst performing your duties within the business.
Offers protection to both you and the company for fines and/or pecuniary penalties imposed by a regulator, for which you are liable to pay (where indemnifiable by Law) for unintentional breaches of certain statutes.
Provides employment practices liability including unfair dismissal claims, alleged wrongful termination and claims of inappropriate redundancy. For example, if an employee alleged that they were made redundant due to having a worker’s compensation claim settled out of court.

Why do I need Management Liability Insurance?

When running a business, whether that’s as an owner, a director or manager, you’re responsible for making some big decisions. From deciding who to hire, where to spend each and every dollar, in all the tasks you do, the possibility of your actions being considered as discriminatory, or bullying, is a very real one. Employment disputes can be costly and claims made for unfair dismissal are on the increase. Management Liability is therefore an important consideration for any business owner, as it can help make sure if you do face allegations of mismanagement, you will have the financial capability to defend yourself in court, as well as pay compensation if required.¹

What's included in management liability insurance?

Directors and Officers Insurance
Provides protection for Directors & executive management of a business where you can be personally liable for any actual, or alleged mismanagement of the company whilst performing your duties within the business.

Statutory Liability Insurance
Offers protection to both you and the company for fines and/or pecuniary penalties imposed by a regulator, for which you are liable to pay (where indemnifiable by Law) for unintentional breaches of certain Statutes.

Employment Practices Liability
Protecting you as an employer and the business against actual, or alleged claims brought on by your employees involving wrongful dismissal, bullying, harassment and other employment related incidents.

Tax Audit Cover
When your business receives an unexpected tax audit, you need protection against the cost of responding.

Crime Risk
Protection for your business against incurring direct financial loss, resulting from acts of fraud or dishonesty committed by any employee/s &/or including third parties.

Management liability claims examples

Unfair dismissal

($107,348)
Claimant alleged that they were made redundant due to having a Workers Compensation Claim settled out of court. A settlement as well as legal costs were paid.

Employee Theft

($2.5 million)
A manufacturing employee manipulated the accounts payable system to create non-existent customers and generated purchase orders and invoices to transfer money to the fake accounts, by accessing other employee authorisation details. An internal audit eventually discovered the total losses.

Work Health & Safety

($264,000)
WorkSafe prosecution after an employee of our client was severely injured when he was struck by a truck vehicle and pinned between the truck vehicle and a tow motor. Insurer paid for defence costs.