What is Management Liability Insurance?
There is a lot of responsibility in running a business, managing employees or sitting on a company board for example. Are you protected if someone alleged you had failed in your duties as a Director or manager? You absolutely need to consider Management Liability Insurance.
If you’re in any of the above positions, you’ll be aware of the multitude of regulations and laws in Australia, and how important compliance with these is. The speed with which these can change and evolve, means the risk of an error or non-compliance can be high, especially for smaller businesses who may not have the time or expertise to monitor things in their business.
What does Management Liability cover?
Management Liability Insurance has evolved from the old Directors and Officers (D&O) cover of the past. While D&O Insurance is still around and has its place in certain organisations, Management Liability is a more flexible and comprehensive cover that provides protection for Directors and Management as well as employees and senior management for financial loss where another party alleges breach of duty or misconduct.
There are usually multiple sections to a Management Liability Insurance policy, consisting of Directors and Officers cover, Employment Practices Liability, Crime (money and internal fraud), Tax Audit cover and Statutory Liability as the main headliners.
Consider your exposure to employee driven claims, like harassment, unfair dismissal, occupational health and safety. Or your exposure to internal fraud, or the accountants cost of a tax or other regulatory audit. Another big consideration is fines and penalties for breaches of Workplace Safety regulations, which can be significant in terms of monetary penalty but also reputational cost.
Who needs Management Liability insurance?
Every business in Australia works within the Corporations Act 2001 - therefore any business has the potential to breach this legislation. Your exposure to the risks covered under Management Liability is not limited to your company size or reach, but rather your ability to comply with the legislation and industry regulations you need to adhere to, and your interactions with stakeholders.
To put it simply, all businesses should consider Management Liability in their insurance program.
Management Liability is a crucial component of a comprehensive insurance program for your business. Working with an experienced broker to tailor a cover to your needs and industry, is the best way to make sure you’re getting the right policy for the right price.
Call me to discuss how I can help you get the right cover in place today.
This article originally appeared on MeyerInsure 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 Laura Meyer.