What Is Management Liability Insurance

Management Liability Insurance safeguards against risks tied to company management.

It covers claims on the company and its directors/officers, crucial for those who are also company owners/shareholders.

Management liability insurance
Management liability insurance: Photo source (Reddit.com)

Policies commonly include:

  • Directors and Officers Liability: Covers losses caused by a director or officer’s alleged mismanagement or improper conduct.
  • Employment Practices Liability: Covers losses resulting from employment practices disputes, such as claims filed for discrimination, sexual harassment and wrongful termination.
  • Fiduciary Liability: Covers losses resulting from mismanagement of employee benefit and pension plans.
  • Professional Liability (also Errors and Omissions): Covers losses resulting from negligent acts, omissions or errors.
  • Crime Insurance: Covers losses resulting from employee or outsider criminal activity such as theft, fraud, forgery and employee dishonesty.

Management Liability insurance is crucial for construction businesses. We strongly advise having this coverage.

While not mandatory and not for physical assets, it’s affordable and safeguards against losses.

Especially when facing claims from powerful regulators like ASIC, ACCC, WorkSafe, EPA, the policy covers legal costs, third-party damages, and even fines/penalties (where lawful).

If you, as a director/officer, hold personal liability, your assets might cover claim costs.

Benefits Of Management Liability Insurance

Management liability policies can offer a level of protection not available through individual coverages.

The combined nature of the policies allows for fewer gaps and broader coverage definitions. Because smaller organizations statistically have fewer of these types of claims, it may also come at a reduced cost when compared with buying all of the included coverages individually.

While the exposures will always be there, smaller businesses are unlikely to need every form of coverage every year.

Combined policies share coverage between exposures to reduce premium costs.

Conclusion

There is no single standard policy for management liability insurance, making coverage comparison essential.

Management liability is the type of policy you must spend time on with your insurance professional.

The nuances of your business matter when choosing which carrier to place your insurance with as each with strengths and weaknesses and cost differences.

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