Insurance for the Hospitality Industry – What you need to know

Owning and operating your own business may be the culmination of years of hard work and dreams. However, your dream can turn into a nightmare if you do not carry management liability insurance that covers you, your company’s officers, managers, and directors.
You and those at the top of your organisation are where the buck stops. And there are a large variety of situations that can personally impact you and your company’s upper tier. The potential for lawsuits is everywhere. One in five small to medium-sized businesses finds itself defending a wrongful dismissal claim.
According to SafeWork Australia, work-related illness and injury cost Australian businesses 61.8 billion annually. These are the common issues companies must deal with, but there are many, many more. You owe it to yourself and your company to prepare for problems before they happen by securing management liability cover.
A management liability insurance policy protects business owners, managers, directors, and other company officers from personal loss due to issues related to the company. At its core, management liability cover exists to protect higher-ups in a company from the risks and problems associated with managing and running a business.
Every business has a level of risk associated with it. Depending on the industry, some companies will have significantly higher levels of risk than others. Management liability protects those running a company from several problems such as,
It is worth noting that management liability insurance does not eliminate a company’s responsibility for wrongdoing. It protects those in charge from bearing personal and financial responsibility for an action or event that was outside of their knowledge or control.
**For Example**
Dean owns a small brewing company, but his brother-in-law is the Vice President and in charge of day-to-day operations. His brother-in-law dismissed an employee after she allegedly rejected his advances. The former employee filed a suit against the Vice President, the company, and Dean. Because of management liability insurance, Dean will not bear personal responsibility for his brother-in-law’s actions. His brother-in-law will be held responsible for his actions if found guilty of sexual harassment and wrongful dismissal.
There are several occurrences that management liability insurance may not cover. These include,
If your business is big enough to have several tiers of managers or directors, you should consider having a management liability insurance policy. This is true no matter how careful your managers are or the amount of honesty you see in your directors. Not all claims brought against your business will occur because of mismanagement or dishonesty. Being unaware of regulations or other details will not work as a defence.
**For Example**
Myles owns a trendy clothing business. He gets his merchandise from various small manufacturers who use ethical labour practices and responsibly sourced goods. Being proud of his efforts to help workers and the planet, Myles advertises these facts. However, his buyer, unknowingly, was purchasing goods made by children using synthetic materials. Myles’ company was named in a suit for misleading advertising and fined. Management liability insurance financed the defence of the case and paid the fines. So, even though there was no intent to deceive customers, Myles and his managers were negligent because they bought clothing from an unscrupulous manufacturer.
Sorting through business insurance can be frustrating. You need to know that Grace Insurance is with you every step of the way. Our experienced team dedicates itself to finding the best coverage for clients, regardless of the size of your business.
At Grace Insurance, we pride ourselves on delivering top-notch customer service to all of our clients. If you have questions about management liability insurance or other kinds of business coverage, do not hesitate. Contact Grace Insurance right away. We will get you the answers you need.
This article originally appeared on Grace Insurance Blog and has been published here with permission.
Advisr does not provide advice and does not hold a financial service license (AFSL). All information above has been provided by Frans du Plessis.
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