Management Liability Insurance

Management Liability Insurance

The management liability insurance is primarily designed to protect the officeholders (directors), the company and its employees against financial claims arising in case of wrongful act. Wrongful act means an actual or alleged breach of duty, breach of trust, neglect, act of error, misstatement or misleading statement, act or omission, breach of warranty of authority or other acts done or attempted by, or any other matters claimed against director and officer while acting in their capacity

For example, you may be held liable personally for any actual or alleged breaches of the Corporation Act like insolvent trading. Management liability insurance can protect your business and personal assets such your property from being sold to pay the financial claims made against you.

Management Liability Insurance policies vary in the benefits they provide, however to give an idea, here’s the type of cover that your policy may include

Employment practice liability: Covers payouts for claims of employment breaches, such as wrongful dismissal, bullying or discrimination.

Directors’ and officers’ liability: Protects your proprietary limited company’s past, present and future directors, officers and managers against claims of wrongful acts, such as misrepresentation or breach of duty.

Crime: Protects your business against claims such as employee or third-party fraud (not all criminal activity is covered).

Corporate liability: Covers costs that your business would incur if you need to defend and settle claims from outside parties alleging wrongful conduct, as well as investigation into the affairs of the company.

Statutory liability: Covers the cost of defence, fines and penalties under some statutes e.g., Work Health and Safety (fines under Work Health and Safety cannot be covered by insurance in NSW, VIC & WA).

Government Inquiry costs: Covers you for the cost of representation at government inquiries.

Defence costs: Covers your legal costs if your business ends up in court. This cover only operates when the underlying claim is covered by the
policy.

Do you know?

The number of claims for unfair dismissal that were lodged in Australia in 2020-21.
(Fair Work Commission, Annual Report 2020-21)

Australian boards spend 55% of their time discussing risk and compliance issues.
(Australian Institute of Company Directors, Director Sentiment Index Survey,
2022)

The percentage of frauds at Australian companies that are committed by an employee.

(PwC, Global Economic Crime and Fraud Survey, 2020)

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