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Management Liability Insurance for Businesses


Management Liability insurance covers the many risks and exposures in managing a business.

Management Liability insurance has been specifically designed to meet the increasing insurance needs of small to medium businesses. Management Liability insurance provides benefits of comprehensive cover combining the many risks that threaten businesses and expose the bottom line. 

Management Liability insurance will generally be suited to all residential and commercial builders and trade companies, who are seeking to guard against the potential threat of legal action in their daily operations¹, including the following risks:

  • Employees - unfair dismissal, bullying and harassment, theft by employees.
  • Government & regulators - occupational health and safety breaches and tax issues.
  • Crime – employee theft and direct financial losses.

 Legal action brought against your company can not only potentially threaten the survival and cash flow of your business but could also impact your personal assets. If faced with defending a claim, you or your company could be responsible to pay legal costs and damages.
 

Who is covered?

Management Liability insurance can protect the company / policyholder and company subsidiaries, as well as key decision makers including:

  • The directors, officers and trustees
  • Employees, including part-time or temporary employees and contractors that are under the direction of the company
 

What is covered?

Subject to the policy terms and conditions, a management liability insurance policy can cover the following areas of risk and provide the following benefits:

Management Liability

  • Protection of your personal assets as a director or officer against losses arising from claims of “wrongful acts” by providing indemnity to Directors & Officers and Insured Persons for Claims brought against them where the Company cannot indemnify them (unwilling / unable / insolvent or prevented to at law).
  • Reimbursement of legal costs, damages and settlements.
  • Public relations expenses to manage your business image in the event of a claim.

Some examples of “wrongful acts” may include:

  • Errors or omissions;
  • Breach of duty;
  • Misleading statements;
  • Breach of warranty or authority; and
  • Employment practices breaches.

The allegation of a “wrongful act” may be brought by:

  • Competitors;
  • Clients;
  • Regulatory bodies;
  • Creditors;
  • Liquidators;
  • Shareholders; and
  • Employees

Corporate Liability

Cover for losses arising from:

  • Pollution caused by the operation of your business.
  • Occupational health and safety breaches
  • Breach of contract
  • Employees stealing from the company
  • (for trustees) wrongful acts in connection with decisions about superannuation funds
  • Responding to a business crisis event, which can extend to cover independent management consultants

Statutory liability

  • Protection of the company, executives and employees against claims resulting from the issuance of a penalty notice to pay a pecuniary or administrative fine or penalty pursuant to an Act of parliament.

Employment practices liability

  • Protection against losses resulting from claims made by employees (or potential employees) for employment related matters.
  • Cover for losses arising as a result of third party harassment or discrimination claims.

Crime Cover

  • Cover for theft or direction financial loss. Legal fee and loss recovery fee cover ($50,000 for each) in excess of the limit.
  • Investigative specialist’s costs to investigate, prove and report a loss.
Contact
1800 762 852

Claim Scenarios

Wrongful dismissal

A senior employee is dismissed after lodging complaints of bullying and aggressive conduct by the managing director. Complaints are also made of racial discrimination and disability discrimination.

Outcome: The matter is settled for a 6 figure sum.

Employee fraud by collusion with supplier

A trusted employee has authority to select suppliers for the company. He channels large purchases through one supplier in return for regular cash payments of several hundred dollars each month. The fraud is only discovered after 4 years and an anonymous tip off.

Occupational health and safety

A workplace death is held to be caused by an inadvertent accident. The company pleads guilty to charges of failing to provide a safe plant and system of work, training and supervision.

Outcome: The directors are not convicted. Defence costs and the fine each exceed 6 figures.

The examples are illustrative only and not to be relied on to justify coverage in any particular situation.
*For the extensive policy cover or for further information please refer to the policy wording or talk to your HIAIS broker.