Do you Need Management Liability Insurance?

Do you need Management Liability Insurance - Northern Insurance Solutions

Management liability insurance is designed to protect the directors and the company against financial losses in the event they are alleged to have not met their duties.

When you’re running a business, you may be personally liable for any actual or alleged breaches of the Corporations Act. And it’s not just large companies that are exposed – small and medium business owners and officers could be at risk as well.

Management liability insurance covers the costs of defending directors, managers and employees against any claims that are the result of their actions or decisions.

Do I need to have it?

If you are faced with unexpected liability costs, management liability insurance can protect your business and personal assets, such as your home, from being sold to cover the cost of paying claims.

13,281 The number of claims for unfair dismissal that were lodged in Australia in 2020-21.

55% Australian boards spend 55% of their time discussing risk and compliance issues.

24% The percentage of frauds at Australian companies that are committed by an employee.

Use Case Scenario

A former employee claims they were wrongfully dismissed from your business because they were unwell at the time their position was terminated. They want to be reinstated to their role and remunerated for their loss of income while they were out of work. After numerous unsuccessful conciliation attempts, the matter is brought before a court, and you have to pay damages to your former employee.

A Management Liability policy allows you to recover some or all these costs so you can continue to run your business without having to sell your business or personal assets. Depending on your policy, you may be able to make a claim for your legal defence costs, as well as the amount paid to your former employee.

What is Covered?

Employment Practice Liability – Covers payouts for claims of employment breaches, such as wrongful dismissal, bullying or discrimination.

Directors and Officers Liability – Protects your proprietary limited company’s past, present and future directors, officers, and managers against claims of wrongful acts, such as misrepresentation or breach of duty (subject to business size).

Crime – Protects your business against claims such as employee or third-party fraud (not all criminal activity is covered).

Corporate Liability – Covers costs that your business would incur if you need to defend and settle claims from outside parties alleging wrongful conduct, as well as investigation into the affairs of the company.

Statutory Liability – Covers the cost of defence, fines and penalties under some statutes e.g. Work Health and Safety (fines under Work Health and Safety cannot be covered by insurance in NSW, VIC & WA).

Government Inquiry Costs – Covers you for the cost of representation at government inquiries.

Legal Defence Costs – Covers your legal costs if your business ends up in court. This cover only operates when the underlying claim is covered by the policy.

Northern Insurance Solutions (NIS) can assist you to identify the day-to-day risks which your business faces and help you to decide how to handle and manage those risks which you decide to transfer to insurance.

Northern Insurance Solutions

Based in the Burdekin, Northern Insurance Solutions fight for the rights of North Queensland businesses to receive quality insurance policies that are ‘value for money’ and supported locally by a professional, results-driven team who care!

Our experienced, friendly, and reliable insurance team pride themselves on their holistic approach for creating effective insurance solutions using globally branded products.

With a staff combined 100 years of experience, you can trust in our team to provide a holistic approach for creating effective insurance solutions using globally branded products from Steadfast.

Speak with us about how we can work with you to help make your business more resilient.
Call our office in Ayr today on 07 4783 1310 to discuss.

Read about our approach to managing business insurance.

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