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Our Top 8 Management Liability Tips

Management Liability Insurance Brisbane – Our Top 8 Tips
If you’re starting to get serious about protecting your business, then it’s no wonder you’re considering Management Liability Insurance. Whether you’re on the board of directors or starting up an SME – you’re liable for a range of issues around business conduct. If you had claims arising against you for alleged misconduct, it could not only cripple your business, but your personal finances too. 
Holding a Management Liability insurance policy to protect you and your business should be a non-negotiable in your business’ risk management framework. Keep reading as we deliver our top 8 management liability tips to help you construct your very own business safety net. 
What is Management Liability? 
Management Liability refers to the risks and exposures that businesses and their managers or owners face across the areas of people, finance, regulations and stakeholders. Protection for management and directors is vital today, given the enormity of responsibilities that they take on. Should a director or business owner have a claim of misconduct made against them, not only is the business at stake, but it can absolutely devastate the individual financially through costs, fines and financial settlement pay-outs.  
Management Liability Insurance is therefore designed to help protect the managers of businesses against claims that arise from alleged wrongdoings or mismanagement. It suits businesses of all structures, including public and private companies, sole traders and partnerships.
What does Management Liability Insurance Cover? 
Management Liability Insurance is a single insurance package made up of a number of different business insurance coverages that help protect you and your company against the risks of running a business. Broad-scale in nature, Management Liability insurance covers the business against claims sustained from mistakes or deliberate action and the company directors, officers, or employees (both past and present). 
The cost of investigating, defending, and settling claims by a third party – not to mention compensation that the business is liable for – can amount to enormous sums of money. Holding Management Liability helps bridge the gap and forms a vital part of your businesses risk management strategy. 
The different Management Liability insurance covers extend across: 
Directors and Officers Liability (D&O)
Directors and Officers insurance is for claims brought against past, present and future directors and officers of organisations for claims of wrongful acts or breaches of their duties while they held their roles.

Management Liability insurance is designed to provide protection to both the business and its directors or officers for claims of wrongful acts in the management of the business.

A business insurance pack can provide cover for your business premises and contents, against loss, damage, theft or financial loss from an insured interruption to the business.

Purchase up to six products under one Business Insurance Package. 

Directors and Officers insurance is for claims brought against past, present and future directors and officers of organisations for claims of wrongful acts or breaches of their duties while they held their roles.
Employment Practices Liability 
Provides coverage for claims made against you with respect to breaches of the employment practices act, such as wrongful dismissal, discrimination, harassment and more. 
Company Liability
This provides cover for legal costs associated with attending official inquiries as well as the cost of investigating claims.
Company Reimbursement
This provides compensation to your company for any monies that are to be paid by the insured in order to settle a Directors & Officers claim.
Trustee Liability
If your business entity is operating under a Trust structure, then similarly to Directors and Officers cover, Trustee cover will help provide cover to trustees against claims for liability from alleged wrongful acts in performing their trustee duties. Also, similarly to company reimbursement, if the trust provides indemnity to trustees per any indemnity provisions within the trust deed, then inbuilt reimbursement cover can reimburse the trust for the expense of indemnity.  
Fidelity (Crime) Liability
This cover protects your business against loss of money and tangible property through dishonest employees, contractors, shareholders and other third parties. Fraudulent acts, including embezzlement, through Eftpos theft, falsifying invoices, and electronic and computer crime, are typically all covered. 
Fidelity (Crime) Cover 
This cover protects your business against loss of money and tangible property through dishonest employees, contractors, shareholders and other third parties. Fraudulent acts, including embezzlement, through Eftpos theft and falsifying invoices are typically all covered.  
Business Crisis Containment
If a crisis is threatening your company, then business crisis containment will cover any costs of retaining a crisis management consultant to aid in containing the crisis. 
Statutory Liability
Statutory liability cover is there to help cover the cost of any fines or penalties incurred by the directors/officers in the event of a statutory breach. This includes workplace health and safety claims, workers’ compensation, and industry-specific rules and regulations. 
Tax Audit Cover
If your business tax returns are audited, Tax Audit Cover can provide money for the reasonable costs incurred by your accountant that are associated with the audit and investigation. 
Our top 8 tips for Management Liability Insurance 
Tip 1: Size does not matter – small businesses are equally at risk as large businesses
While it is true that the larger a business, the larger the sums involved in claims are, the fact of the matter remains that all businesses, big or small, come with management liability exposures. Regardless of the business type, if you’re a business owner or manager, then Management Liability insurance is there to cover you against claims that may arise from your actions and decisions as a manager. 
Even if you’re opening, or already own a small or medium-sized company, your legal obligations are the same as a larger organisation. More pertinently, if you’re the business owner or within the senior management team, then the responsibility to meet your legal obligations falls on you!
Suppose you’re a two-person operation, or even a warm family-run business. In that case, it is easy to feel that you’re operating in a bubble of business-risk-immunity, but that is never the case. If you employ staff, then you also introduce the inherent risks of claims against employment practices, theft, and negligence. Running a business or company of any description still opens you up for claims against the business entity itself. 
Tip 2: Know your risks
It may seem obvious, but to mitigate your business risks, you first need to understand what they are. More than ever, the business world is proving just how dynamic it truly is. The digital era we are now living within brings a whole new pack of liability cards to the table. Add that to the standard responsibilities as a business owner such as environmental, workplace health and safety, law, superannuation, plus the responsibilities you hold to your investors, lenders, or customers – and it makes for a vast liability landscape. 
Operating in such a highly regulated business environment means that risk is ever-present in your day-to-day operations. At Hunter Broking Group, we understand that you have enough on your agenda without worrying about hidden risks. That’s why we’ve partnered with reputable risk professionals who can assist with:
  • Risk Reviews
  • Risk Registers
  • Risk Management 
  • Risk Strategies
The rise of social media platforms has increased socially engineered fraud and embezzlement in the workplace. The constantly changing regulatory environment means that a business’ statutory liability is also drastically increasing. We believe that a proactive solution to liability management is the key to ensuring your business success. That is why we have access to risk management services to help identify, evaluate, and control your business risks.  
Tip 3: Don’t confuse Management Liability cover with Professional Indemnity Insurance Covers
Among the complexities of business management are the numerous types of insurances available to you, including the full suite of liability covers. Holding Professional Indemnity Insurance is a wise business move but doesn’t provide cover for your Management Liability.
 A great way to think of it is that Professional Indemnity Insurance will cover your professional business ‘activities’ while Management Liability Insurance covers the ‘running’ of your business. 
If you operate in an industry where you provide professional advice or services to third parties, and they suffer a financial loss due to that professional advice, then Professional Indemnity insurance has you covered. However, if a third party suffers a loss due to mismanagement of your business, then this is where Management Liability covers you.
The two forms of insurance are undoubtedly important, with neither taking precedence over the other. However, they are undoubtedly separate styles of cover, under separate policies and need to be purchased separately (we can help with that).
Tip 4: One policy does not fit all
Your business is unique and, as such, has a unique set of liability management needs. A one-size-fits-all approach to Management Liability cover is never the answer and may cost you even more time and money than holding no cover at all. This is why it is essential to understand your unique business risks and seek cover tailored to your specific needs and circumstances. 
Finding the right fit for your Management Liability cover is what we do best. We don’t just sell you an insurance product, we guide you in sourcing the most appropriate insurance cover by first assessing your specific needs, and recommending the best value insurance solution for your business while maintaining the highest standard of cover. 
Tip 5: Be aware of exclusions
Exclusions come with every insurance product type on the market, including Management Liability Cover. Like any insurance policy, whether it be for your car, your home, or even your business, there are some limitations to the cover offered to you. After all, insurance companies need to manage their risk too! 
It’s important to not only be aware of the events that you are covered for, but also those that you aren’t. Things like anti-competitive behaviour, product liability (or product recall), asbestos claims, pollution, and wilful breaches of duty (just to name a few) are common exclusions on Management Liability policies. We work with you to ensure that you have the broadest coverage, and we do not shy away from advising you of the exclusions relating to your cover. 
Tip 6: Regularly review your cover
True with most approaches in anything ‘business’, if you set and forget, you’ll likely regret. As your business grows and evolves, and the business world twists and turns, so too will your liability management needs. Keeping on top of reviewing your Management Liability cover is not only sensible in maintaining the appropriate amount of cover, but you may also be able to access a more competitive offering, saving you precious financial resources that can be invested back into your business. 
Business milestones such as forming your company, undergoing rapid growth, signing a large contract, employing staff or even submitting a Management Liability insurance claim, all bring about a different scale of liability that may not have been considered when your policy was initiated. 
Hunter Broking Group refuses to take a set and forget approach; we are here to work with you, not just now, but throughout your business journey to help you maintain the right cover with every step your business takes. 
Tip 7: Consider retroactive cover  
One of the lesser-known features of some Management Liability cover is an inclusion called ‘retroactive cover’. Retroactive cover can be quite advantageous for business owners, as effectively it covers them for claims that relate to incidents that occurred before the policy was taken out. Every insurer is different, with some insurers offering unlimited retroactive cover and others limiting the cover to a specific date.  
As an example, let’s say the Hunter Broking Group assisted you in establishing a Management Liability policy today. In one month’s time, a claim arises from a former employee who alleges they experienced bullying within the workplace while an employee of your business. You hadn’t previously been made aware of any mistreatment towards the employee and the date of the alleged incident was obviously prior to your Management Liability cover going into force. 
Holding retroactive cover could help cover the associated legal costs with investigating this Employment Practices Liability claim despite the incident occurring prior to holding cover.  
Tip 8: Talk to an experienced broker
Management Liability insurance is not an off-the-shelf purchase. Exercise caution with insurance companies who ask minimal questions and recommend a product without understanding your liability management needs first. As we mentioned earlier, no two businesses are the same, so neither are the risks they face. Furthermore, smaller entrants to the insurance space may also advertise significantly discounted premiums in order to attract new business. This is generally a fair sign that they may have an inferior product that inadequately covers you, minimal funds under management to back up claims and a juvenile or completely lacking claims history.
At Hunter Broking Group, we are fully licensed insurance broking experts who view Management Liability not just as a product, but an ongoing risk management strategy to be reviewed, updated, and modified as required. Not only do we work with you to understand your individual needs, but we also provide technical advice and provide recommendations on the most appropriate cover through accessing hundreds of insurance companies and underwriting agencies. 
Most important, Hunter Broking Group works for you, the client – we are not the insurer. This means you have us in your corner at claims time, helping you navigate the confusing and stressful claims experience. We advocate for the strongest claims outcome for you. Would buying directly from an insurer provide you the same service at claims time? Probably not.
If you have any questions about Management Liability Insurance, please get in touch and we’ll be more than happy to help.
General Advice Warning: This advice is general and does not take into account your objectives, financial situation or needs. You should consider whether the advice is appropriate for you and your personal circumstances. Before you make any decision about whether to acquire a certain product, you should obtain and read the relevant product disclosure statement.

All information above has been provided by the author.

Hunter Broking Group, ABN 97 622 090 715, AFSL 460382

This article originally appeared on Hunter Broking Group Media and has been published here with permission.

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