Management Liability – Why Every Business Should Have it

By Amanda Morris    November 14, 2019

No one loves risking personal assets, especially when you are a company director.  If you own a business or are involved in the management of a company, you carry certain responsibilities which leave you personally inclined to unexpected circumstances that arise from finance, management and benefits.

Management Liability Insurance protects the company and particular people who undertake these indispensable roles within the business from the risks and exposures correlated to running the company such as

It can include:

  • Directors’ and officers’ liability cover and company reimbursement cover for claims arising from the management of the company
  • Employment practices liability cover.
  • crime loss cover including investigation expenses.

Management Liability Claims examples

Below are some claims that have been paid under a management liability policy. Do you relate to any of these claims or exposures?*

Director’s and Officer’s

Engineer, 56 staff, $20M turnover
The insured agreed to propagate berry fruit varieties for the claimant who in turn provided them with the plant material. At various times, the claimant would place orders with the Insured to propagate blueberry and raspberry plants. There was a contractual dispute as to whether this agreement applied to all orders with the insured stating that each order created a separate contract. The claimant sought to terminate the Agreement alleging that the Insured failed to fulfill orders that were placed.
The plaintiffs accepted an offer from the Insured to the sum of $400,000 in full and final settlement of the claim. Payment: $592,000.


Machinery and Equipment Manufacturer, 8 staff, $2M turnover.
A claim was made against the Insured by a competitor, alleging that they used Google Adwords Advertising to misrepresent their ability to provide the same products and services as the Claimant.
The Insured was able to claim under the Entity section of the Policy and were covered for legal defence costs and settlement to the Claimant. Payment: $42,000.

Employment Practices Liability

Retailer, 7 staff, $500K turnover.
An employee of the Insured lodged a complaint with the Human Rights Commission alleging that she had been sexually harassed by the Manager and sought compensation of $1,100,00.
The Insured was able to claim under the EPL section of the Policy in respect to harassment and discrimination charges, settlement and legal defence costs in defending the claim. Payment: $250,000.


Food, Wholesaler, 40 staff, $80M turnover.
Over the course of 1 year, an employee of the Insured voided sales invoices and embezzled funds from the Company into their personal account totaling $400,000.
The Insured was able to claim under the Crime section of the Policy for reimbursement of the lost funds. Payment: $430,000.

Tax Audit

Hotel, 15 staff, $2M turnover.
The Office of State Revenue conducted an audit in relation to tax returns previously lodged by various entities within the Insured’s group of companies.
The Insured purchased the Tax Audit Extension under their Management Liability Policy and were able to claim in respect to Accountants’ costs in responding to the audit. Payment: $40,000.

Statutory Liability

Importing/Exporting, 18 staff, $8M turnover.
The Insured is an importer of road wheels from China. They were investigated by Australian Customs and charged with obtaining a financial advantage with their wheels through the submission of false documents and avoiding customs dumping and countervailing duties.
Indemnity was granted for defence costs. The potential penalties were severe for the Insured including lengthy terms of imprisonment. DUAL funded the appeals process as well as the defence. Payment: $150,000.

What usually isn’t covered?

Excess and exclusions you need to pay can vary greatly depending on your insurer. Your policy does not generally cover the following:

  • Cyber crime (unless specifically presented in your policy – you can get cover extensions in some cases)
  • Employee benefits
  • Property damage or bodily harm

There are other exclusions which your ARMA insurance Brokers can outline for you.




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 suitable 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.

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