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Great management is fundamental to the success of every business. However, when unwelcome allegations of mismanagement, misconduct, or legislative breaches begin to surface, the entire business could be liable. Allegations against management and breaches can include:

  • Occupational Health & Safety (OH&S) incidents;
  • sexual harassment claims;
  • unfair dismissals;
  • defamation cases;
  • statutory breach of duty; and
  • statutory fines and penalties.

Business insurance aims to protect your business’ financials against legal costs and other expenses if these allegations are substantiated, and comparing business insurance policies can be a great business investment.

business management liability meeting

What is covered by Management Liability Insurance?

It is important for every business owner or manager to understand what business insurance is and what it covers.

Management Liability Insurance in particular provides a safety net for the company or manager to land on by protecting your business against expenses related to a breach in liability from management. This protection can include covering expensive legal and defence costs, claims investigation costs, damages and claimant costs awarded against the business, and some civil fines and penalties that come from mismanagement, misconduct, or legislative breaches.

Management Liability
  • Protection against fraud or breach of fiduciary duty
  • Protection against misappropriation of trade secrets
  • Protection against unfair competition and breach of confidentiality

For example: If a company director is found guilty of trading company secrets for profits – if the business has the right level of management liability insurance, it will be covered for  legal fees and settlement expenses against the company or director, which can be costly.

Corporate Liability
  • Protection against allegations of fraud
  • Protection against being prosecuted by a regulatory authority for breaches of the Corporations Act (2001)

For example: If a small business employee is found guilty of fraudulently using a customer’s credit card details – if the business has the right level of management liability insurance, it will be covered for legal fees and settlement expenses awarded to the customer.

Employment Practices Liability
  • Protection against allegations of bullying, sexual harassment, unfair dismissal, and discrimination

For example: If a business manager is accused of sexually harassing an employee, and the employee suffers mentally and physically – if the business has the right level of management liability insurance, it will be covered for legal fees and settlement expenses awarded to the employee which can possibly reach tens of thousands of dollars.

Statutory Liability
  • Protection against a breach of Occupational Health and Safety Act (2011) and other legislation

For example: If a construction manager is found negligent for not having a safe workplace, and a builder or labourer has critically injured themselves on the job because of this negligence – if the business or construction manager has the right level of management liability insurance, it will cover some, if not all of the settlement/legal fees and expenses awarded to the employee.

Theft/Crime
  • Protection against crime or theft of money and property by a business’ employees.

Does your business need management liability insurance?

Determining the size of the business and the level of associated management risks will determine the appropriate level of cover and how much you should insure your business management for. There are some management liability insurance policies which cover between if high level cover is necessary.

We recommend that all businesses consider a product like management liability insurance cover, in order to better protect themselves from expensive legal costs and other expenses if management is held liable for any accusations of mismanagement or misconduct.

What doesn’t management liability insurance cover?

While management liability insurance protects your business from legal costs and damages that arise from mismanagement or misconduct, some civil fines, and penalties and/or legislative breaches; there are certain events that aren’t covered by this insurance.

These cases usually include dishonesty or criminal conduct by management, business insolvency, and bodily injury or damage to property – although there are other business insurance policies that may protect your business in these situations.

Does your business need additional insurance policies?

Management is an important function that keeps your business running smoothly, and it should be protected with management liability insurance. However, there are many types of business insurance that are necessary for the protection of your business and its assets, which may also cover legal fees or compensation costs in the case of litigation.

These types of business insurance policies include:

  • Public liability insurance, which protects your business against being held liable for personal injury or personal property being damaged by the business.
  • Product liability insurance, which protects your business against loss or damage to customers made by products.
  • Professional indemnity insurance, which protects your business from being found negligent or in breach of its professional duty, due to any service or advice they may have provided to clients or customers.
  • Revenue, assets, and income insurance, which protects the business against issues affecting revenue, assets, or income directly or indirectly, including:
    • car;
    • building;
    • contents;
    • cyber (e.g. online attacks, breaches of customer data);
    • key person (i.e. business being affected by the loss of a key person); and
    • business interruption (i.e. events which can shut down your business for months at a time, such as a fire or natural disaster ).

In order to protect your future, your business management needs all the protection it can get – because the higher you are, the further you fall, and nobody wants to fall without something to catch them.

If you’re ready to find a great deal and invest in a cost-effective management liability insurance policy, compare business insurance policies with us today.

 

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