Overview
Management Liability Insurance protects individuals and the company in relation to the various exposures associated with managing a company. A Management Liability policy covers claims made against the company itself as well as for claims made against the company’s directors and officers.
This cover is particularly important for directors who are owners/shareholders of a company.
Key Elements
A Management Liability Policy can protect companies (including executives & employees) in the following areas:
- Statutory Liability – covers defence and in some cases fines & penalties resulting from claims of an actual or alleged breach of statute i.e. Work Health & Safety
- Crime Insurance – covers direct losses resulting from employee or third-party theft, and several other insuring clauses
- Directors’ & Officers’ Liability Insurance – protects against claims resulting from management decisions such as misrepresentation or breach of duty. Cover can also extend to tax audit expenses.
- Employment Practices Insurance – covers defence of claims brought by current, past or prospective employees.
Who should consider Management Liability Insurance?
Obtaining Management Liability Insurance is essential and strongly recommended for construction businesses to have in place. Whilst the policy doesn’t cover physical assets in the traditional sense, and is not mandatory, the cover is relatively affordable for the broad protection it provides against losses that could negatively impact your business particularly if the claim is pursued by a regulator such as ASIC, ACCC, WorkSafe, EPA etc.
The policy covers legal expenses related to a claim, damages awarded to third parties, and even fines & penalties (where legally allowed). If you are faced with unexpected liability costs, management liability insurance can protect your business and personal assets, such as your home, from being sold to cover the cost of paying claims.
What types of issues would I be covered for under a Management Liability Policy?
Occupational Health & Safety (OHS) prosecutions and inquiries are the top risk for construction businesses under a Management Liability Policy. Prosecutions can take up to two years from the time of an accident to result in a conviction. This leads to significant legal costs being incurred as a result of accusations of directors or officers breaching their duties under OHS Legislation.