As a business owner, you can face financial devastation through fines, legal costs and settlement payouts. You could also be held personally liable, resulting in the loss of personal assets and monies.
Tailored management liability policies can protect you from allegations of mismanagement, wrongdoings, misconduct as well as legislative breaches.
Management liability covers these seven main areas
- Directors’ and officers’ liability, for claims against past, present and future directors and officers.
- Employment practices liability, including unfair dismissal, bullying, or discrimination claims.
- Corporate or company liability which extends to attending official inquiries and investigating costs.
- Statutory liability, such as for fines and penalties.
- Tax audit, including reasonable professional fees for investigations.
- Crime protection, for loses of money or property due to dishonest staff, shareholders, or third parties.
- Superannuation/trustees’ liability, for when your business entity operates under a trust structure.
Policies differ between insurers, however they generally exclude claims due to liquidation, bankruptcy, intentional fraud, superannuation liabilities, asbestos-related liabilities, discharge of pollutants, accidental property damage or injury to third parties.
Not the same as professional indemnity
Management liability offers cover in running your business. It protects the directors and officers from risks relating to company management. That means covering your risks concerning people, finance, stakeholders, and regulations. It’s for breaches of professional duty regarding the professional services or advice given.
Therefore, management liability and professional indemnity are separate policies, though they can be combined under a ‘policy package’.
Your business size doesn’t matter
SMEs generally have the same legal obligations as larger organisations. The risk usually arises from decisions and actions made by a manager.
Employees, shareholders, customers, regulatory authorities, creditors, competitors and liquidators are examples of those who can make a claim.
You can get retroactive cover
It might suit your business to select a management liability policy that does include cover for claims relating to incidents that happened before you took out the cover, providing you were not aware of any pending litigation. Called ‘retroactive cover’, some include a specific date for cover while other won’t cover prior claims.
If you would like to know more about better handling your managements liabilities risks, please CLICK HERE or contact us for more information.