Management Liability cover exists to protect you and the company against the exposures and risks in managing a business.
In recent years the Management Liability product has evolved from Directors and Officers liability insurance providing legal expense and damages for personal liability against the director or where the director has no case to answer reimbursement to the company or the director’s legal expenses. Today the cover provides far more cover for the corporate entity for the actions of its directors and officers and the consequences of their decisions. This evolution recognises the changing Legal landscape for business in Australia.
It differs from Professional Indemnity Insurance in that Professional Indemnity Insurance is there to cover the “activities” of the business whereas Management Liability is there to cover claims arising from the act of running a company.
Claims occur regardless of the high level of care being provided and Management Liability claims can be financially devastating for the company through disruption to business, investigations and legal fees. Businesses can be exposed to high litigation and investigative costs regardless of whether any negligence actually occurred.
What Management Liability Covers:
- Damages and Claimant Costs awarded against you
- Legal Costs incurred in defending a matter
- Investigation Costs
- Civil Fines and Pecuniary Penalties – Subject to certain limitations
Covers Included
- Insured Persons Liability (Directors and Officers)
- Company Liability
- Employment Practices Liability
- Trustee Liability
- Fidelity
- Some policies include a limited Cyber Liability in addition
Types of Claims this Insurance will respond to:
- Breach of Directors and Officers duties
- Defamation
- Statutory Fines and Penalties (Civil) in certain circumstances
- Breach of Trade Practices Act and other statutes
- Occupational Health and Safety proceedings
- Breach of Confidentiality
- Allegations of illegal or improper conduct
- Tax Audit investigation charges
- Infringement of Intellectual Property rights
Management Liability is designed to protect in instances where you are accused of alleged improper practices such as breaching a contract or terminating the employment of someone on unfair terms. There is also the potential for other incidents that you could be held accountable for such as sexual harassment or bullying in the workplace or if you had a dishonest employee that stole from the business.