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Management Liability Insurance

Management Liability Insurance covers the costs of defending directors, managers and employees against any claims that are the result of their actions or decisions.

Why do I need it?

When you’re running a Business Insurance, you may be personally liable for any actual or alleged breaches of the Corporations Act. And it’s not just large companies that are exposed – small and medium business owners and officers could be at risk as well.

Management Liability Insurance covers the costs of defending directors, managers and employees against any claims that are the result of their actions or decisions.

Not sure whether you need it or not?

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 costs of paying claims.

Penalties awarded against companies and their directors or officers for work health safety breaches have increased by 43% to $22.3 million in one year. Penalties now average $62,000 per company according to the Safe Work Australia, Key Work Health Safety Statistics 2014.

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Did you know?

The likelihood of a claim that could be covered by a Management Liability policy has tripled in the last five years, with 50% of notifications resulting in a claim

(Chubb 2016 Private Company Risk Survey)

The most common claims are for employment practices like bullying, harassment and wrongful dismissal

(Chubb 2016 Private Company Risk Survey)

Major claims by amount relate to crime - including employee fraud

(DFAT, Survey of Australian’s Travel Insurance Behaviour, August 2016)

Management Liability Insurance policies vary in the benefits they provide. Here are the types of cover that your policy may include:

Management-Liability-table

Exclusions and the excess you need to pay can vary greatly depending on your insurer. Generally, Management Liability Insurance policies won’t cover:

  • Cybercrime, unless specifically set out in your policy (you can get cover extensions in some cases)
  • Employee entitlements
  • Property damage or bodily injury.

There are other exclusions which your Westlawn Insurance Broker can outline for you.

Case study – Management Liability Insurance

A former employee claims they were wrongfully dismissed from your business because they were unwell at the time their position was terminated. They want to be reinstated to their role and remunerated for their loss of income while they were out of work. After numerous unsuccessful conciliation attempts, the matter is brought before a court and you have to pay damages to your former employee.

A Management Liability policy allows you to recover some or all of these costs so you can continue to run your business without having to sell your business or personal assets.

Depending on your policy, you may be able to make a claim for your defense legal costs, as well as the amount paid to your former employee.

Not sure whether you need it or not?

Talk to an advisor

 

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