What is Management Liability Insurance?
Management Liability is a crucial element in a businesses’ insurance portfolio. In a world where actions are carefully watched and the slightest miscue can lead to ruin, your higher-level executives, managers, and directors need the protection that management liability insurance offers.
Management liability insurance covers risks and problems related managing and running a company. A management liability insurance policy will protect high-level employees, as well as the company, from exposures related to management activities and governance of a company.
What Management Liability Risks Are There?
While managing a business comes with inherent risks, here are the top risks that management liability can cover.
- Strategic Risk
- Compliance Risk
- Operational Risk
- Reputational Risk
Types of Liability
There are a number of different types of liability that fall under the umbrella of management liability. These include,
Company Liability
Claims of this nature are usually the result of managerial actions but are lodged against the company first. Some examples include:
- Environmental Prosecution
- Identity Fraud
- Breach of Contract
- Shareholder Dispute
- Accidental Death
Employment Practices Liability (EPL)
A business receives protection for acts such as harassment, wrongful dismissal, and employee misconduct. An EPL policy covers directors, officers, and employees against legal action.
Directors and Officers Liability
Under a directors and officers liability policy, anyone involved with company management (including past, present and future directors and officers) has protection. Claims against this liability include:
- Insolvent Trading
- Intellectual Property Breach
- Manslaughter
- Misappropriation of Trade Secrets
- Engaging in Unfair Competition
Statutory Liability
Businesses who allegedly committed a wrongful breach of specific legislations are protected by this liability. The policy will pay the fines and penalties levelled against the company. Additionally, statutory liability cover will pay for investigation costs and legal defence.
Superannuation Trustees Liability
This coverage is vital for companies who manage their own superannuation fund for their employees. The policy protects trustees from a variety of disputes ranging from payments going to the wrong person to misrepresentation of payment amounts.
Why Your Business Needs Management Liability Insurance
Unfortunately, in today’s business world, there are many factors that work against business owners. This makes purchasing the right insurance a vital part of your business strategy.
Unforeseen disasters frequently come from things such as,
- Commercial Disputes
- Regulatory Investigations and Actions
- Employment Practice Claims
- Business Failures
- Employee Theft
- The Present Economic Climate
Professional Indemnity Insurance vs Management Liability Insurance
We often get questions from clients asking if management liability insurance is the same as professional indemnity insurance. While it is easy to understand why the two types of insurance cover could be interchangeable, they are totally different products.
Professional Indemnity Insurance protects your business against the ‘professional advice’ it provides. This type of insurance cover comes into play when a third party loses money.
Management Liability Insurance covers your company against ‘mismanagement’ that leads to third party financial losses.
Grace Insurance Experts
For over 20 years, the team at Grace Insurance devoted themselves to doing the best for every client they served. Grace Insurance’s clients do not need to worry about being pushed into a one-size-fits-all insurance package. All insurance cover is tailored to meet the needs of individual clients. This is possible because the team members take the time to listen to our clients and carefully assess their needs. We make sure you get the insurance coverage you need without buying insurance you do not need.
Unfair Dismissal by the Numbers
According to the Fair Work Commission’s Annual Report (2018-2019), employers saw a significant number of unfair dismissal suits.
• 13,422- The number of unfair dismissal applications finalised
• The number of applications filed- 13,928
• 8161 of the cases went to conciliation for resolution
• 2560 cases found resolution before conciliation
• 1927 cases resolved after conciliation but before a formal hearing
As you can see, there is no shortage of unfair dismissal charges. If you did nothing wrong, you must address the situation and devote time and money to the resolution. Because of the numbers and the unpredictability of a suit, management liability insurance is a smart option for businesses of all sizes.
You owe it to yourself to protect your business and your good name. Consider speaking with an insurance expert to learn more about management liability insurance. What you do not know can hurt you.
A Closer Look: Unfair Dismissal
At one time, terminating someone’s employment was an in-house issue getting little, if any notice from outsiders. However, years of poor treatment, discrimination, nepotism, and the like led to strong protection for workers in the event of their dismissal.
While you may strive to be fair-minded and above board with any termination of workers, you can find your company, your directors, and yourself at the centre of a firestorm when you least expect it.
Unfair dismissal is one of the most common complaints against employers, and it continues to grow.