What is Management Liability Insurance?
Management liability insurance is designed to help protect both the business and its directors, officers, and managers from claims that may arise due to their management decisions. A typical policy might bundle several forms of cover, including:
- Directors & Officers (D&O) Liability – Protection for individuals in leadership positions for claims made against them for wrongful acts in their role.
- Statutory Liability – May help with defence costs or certain penalties relating to unintentional breaches of legislation, such as OH&S laws.
- Company Reimbursement – Cover for the business if it indemnifies its directors or managers.
- Crime Cover – In some cases, this includes cover for losses due to dishonest acts by employees, such as internal fraud.
Why Australian Businesses should consider Management Liability Insurance.
Australian businesses operate in a regulated environment, with the Corporations Act 2001, Work Health and Safety (WHS) legislation, the Fair Work Act, and various environmental and financial regulations imposing strict obligations on company directors and officers.
Even when acting with the best intentions, business leaders may find themselves facing a range of issues such as legal action from employees, shareholders, or regulators. The time, cost, and reputational impact of responding to these can be significant, and Management Liability Insurance is one way that Australian businesses can seek to reduce the potential financial burden of these scenarios.
Who Needs Management Liability Insurance?
A common misconception is that management liability is only relevant to large corporations, but the reality is, small-to-medium businesses can be exposed to similar risks.
Some examples of businesses that may benefit from Management Liability Insurance include:
- Family-run businesses with directors or key decision-makers
- Professional service businesses with employee oversight and client contracts
- Trade or construction companies that must comply with health and safety regulations
- Start-ups or tech businesses dealing with investors and contractual risk
These businesses all face exposure to potential claims relating to their management decisions.
Is Management Liability Insurance Mandatory?
Unlike compulsory insurances like workers compensation, management liability is not legally required, but it is commonly considered by businesses as part of a broader risk management strategy.
What’s required for Management Liability Quotations?
In order to provide management liability insurance quotation, we require the following four key pieces of information:
- Annual Turnover
- Number of Employees
- Industry Sector
- Years of Operation
The applicable insurers may include subjectivities within the quotation, and may request additional information be provided prior to coverage being accepted.
At Aviso, we’re committed to helping businesses understand their risk landscape. Our brokers can help you understand what risks your business may face and whether a management liability policy is appropriate. Every policy is different, and the inclusions, exclusions, and limits vary depending on the insurer and the business profile.