Management Liability insurance is designed to provide a level of personal protection to key individuals within a business, as well as the entity itself for a wide range of issues that may arise from management decisions, errors made or alleged wrongful acts.
Management Liability insurance policies compromise of 3 sections of cover:
Directors and Officers Liability (D&O)
Directors and senior staff within a business have specific duties and responsibilities within their role. If these individuals are found to be in breach of these duties, they could become personally liable. This could be the result of litigation from various parties such as shareholders, regulatory bodies and creditors. In the event of a legal action being brought against a director or officer for an alleged wrongful act, a Directors' and Officers' policy will cover their legal defence costs and expenses.
Corporate Legal Liability(CLL)
Often referred to as Entity Defence, Corporate Legal Liability can be brought as an extension of D&O insurance. Similar to D&O insurance, CLL provides protection to the company itself such as any legal costs it incurs should an allegation be made against the entity - for example, an alleged breach of contract, identity fraud, pollution and tax investigation.
Employment Practices Liability (EPL)
Employment Practices Liability can be brought as an extension of D&O Insurance and will protect a company against employment claims. This could be settlements, costs and damages for a wide array of employment violations such as allegations from unfair dismissal, racial discrimination or failure to promote a person in the workplace.
MANAGEMENT LIABILITY INSURANCE
FREQUENTLY ASKED QUESTIONS
What are examples of Managament Liability claims?
Unfair dismissal / discrimination
Libel and slander
Breach of statutory duties
Acting outside authority
It is important to remember that a claim made agaist you or your company doesn't need to be factual or accurate to require defence. It can be a very costly process to simply defend a claim made against you.
Does my Professional Indemnity policy not cover the same thing as Management Liability?
No. Professional Indmenity insurance covers the activities of the business, a Management Liability insurance covers the running of the business.
What can happen if I don't have Management Liability insurance?
If you or your company are unable to pay the costs associated with defending and/or compensting a claim there are a number of possible outcomes depending on the severity.
It is possible that you could be disqualifiied as a Director, lose the good reputation of your business or future businesses, suffer personal bankruptcy or in the worst situations face criminal prosecution.