As an owner and/or Director & Officer of a private entity, you will have certain obligations, duties and responsibilities that may expose you to certain personal liabilities. Management Liability is tailored to protect not only the Directors & Officers of the business, but also the company’s balance sheet.
What is Management Liability Insurance?
Management Liability Insurance is essentially Directors & Officers Insurance for private companies; however, these policies have evolved over the years to protect a lot more than just standard Directors & Officers exposures. Management Liability policies can be customised to include many important coverages, such as the following:
- Directors & Officers Liability from Wrongful Acts (Mismanagement of the Company)
- Corporate Liability and Reimbursement
- Employment Practices Liability (wrongful dismissal, sexual harassment, discrimination, failure to promote, etc.)
- Crime Protection (Employee Fraud or Dishonesty)
- Superannuation Trustees Liability
Policies can be structured to cover the entity as well as the Directors & Officers for Statutory Liability, Employment Practices Liability, Pollution defense costs and OH&S defense costs.
Where do the claims come from on Management Liability insurance policies?
- Shareholders can hold Directors and Officers liable for numerous wrongful acts, such as misleading/deceptive or inaccurate disclosures, not acting in the best interest of shareholders, misappropriation of company funds, errors and omissions in financial reports and many others.
- Regulatory authorities can conduct investigations and initiate claims against directors and officers for breaches for OH&S, financial markets misconduct and environmental breaches; just to name a few.
- Employees claims can consist from wrongful dismissal, sexual harassment, failure to promote, discrimination, unsafe working environment and other employment-related risks.
- Crime claims can consist of the company itself being defrauded by employees or third parties (customers/suppliers) suing for employee dishonesty or fraud.
- Customers/Clients can sue for misleading or deceptive conduct or third- party Employment Practices Liability claims
- Creditors can claim for allegations of being misled or trading whilst insolvent.
Management Liability Insurance typically protects against:
- Damages awarded to claimants
- Fines and penalties assessed by regulators
- Crime (Employee Dishonesty)
- Tax Audit costs
- Legal costs incurred by you and, possibly, the claimants
- Other expenses associated with the claim
Why is this type of insurance needed?
Management Liability, as stated above, is much more than just Directors & Officers insurance. It is a catch-all type policy for many of the mismanagement exposures that can have a serious impact on both the Directors & Officers and the company’s balance sheet. Management Liability is a great risk transfer for all businesses that have multiple employees, shareholders or management type exposures.
What are the factors affecting the cost of an average policy?
The cost of an average Management Liability Insurance policy can vary widely, depending on the following key underwriting considerations:
- Annual Turnover
- Number of Employees
- Type of Industry
- Details of Operational Activities
- Claims History
- Financial Strength (insurers may ask to see financials in some cases, but this is not common for smaller companies)
Why should I contact KBI?
The KBI team has placed Management Liability/Directors and Officers Liability Insurance for over 300 companies in Australia, Asia and North America.
As experts in this area of insurance, we understand the policies well and therefore we can help clients make an informed decision on the suitable purchase of Management Liability for their board and company.
Our Key Management Liability Insurers
For more information on Management Liability Insurance, send us an enquiry or contact:
08 6467 7999
1800 181 310
Travis has specialised in Directors and Officers Liability Insurance for 20 years; he is regularly asked to present on this topic by corporate secretaries, directors, lawyers and managers.
Learn even more about Directors’ and Officers’ Liability Insurance
We are passionate and like to believe we are experts on the topic of Directors’ and Officers’ insurance, but don’t take our word for it please explore further. Presented below are several articles that we’ve prepared specifically on the topic of Directors’ and Officers’ Liability Insurance. Please take a look at these articles and contact us if you have any questions or if you’d like to speak further.