What is management liability insurance?
Management liability insurance is designed to help protect managers of a business against claims arising from alleged wrongful acts.
Management liability policies also operate to help protect the business itself where it is named in claims arising from alleged wrongful acts.
Management liability insurance provides more comprehensive coverage than directors and officers insurance as it protects the business from the financial impact of mismanagement allegations as well as protecting the personal wealth of directors and officers.
Management liability policies can provide cover for a range of mismanagement allegations and legal actions such as:
- Claims for wrongful acts, including breach of duty brought against past, present and future directors
- Allegations of wrongful employment practices (e.g. wrongful dismissal, workplace harassment or discrimination)
- Crime (e.g. fraud, theft)
- Statutory liability (breaching various Australian statutes where legally insurable)
- Regulatory body investigations
Take for instance the following claims example
An employee files a claim against the business for unfair dismissal, in which they claim they were discriminated against by their manager. Whether or not these allegations are proved, the employer and management could face significant costs for defending or settling these types of claims. Having the right management liability insurance in place could cover these costs, protecting the business and its managers from the financial impact of the claim.
What does management liability insurance typically cover?
Management liability insurance includes multiple covers, designed to protect your business from various management and operational risks.
Directors and Officers Liability Insurance
Directors and officers liability insurance is designed to help cover directors, senior executives and employees for losses arising from claims made against them in the discharge of their duties on behalf of the company.
Employment Practices Liability Insurance
Employment practices liability insurance is designed to help cover both the business and its employees against personal grievance claims brought by current, prospective or former employees for allegations of wrongful employment acts.
Crime insurance, also known as fidelity insurance, is designed to help cover organisations against fraud or theft by employees or third parties.
Company Liability Insurance
Company liability insurance, also known as corporate legal liability insurance, is designed to help protect a company from claims of alleged wrongdoings brought against the company itself.
Statutory Liability Insurance
Statutory liability insurance is designed to help cover organisations, their directors, executives and employees against liability arising out of unintentional breach of various Australian statutes (where insurable under the relevant legislation).
Trustees Liability Insurance
Trustees liability insurance helps cover trustees against claims for liability arising from alleged ‘Wrongful Acts’ in performing their duties as trustees. Reimbursement cover is provided to the trust where it provides an indemnity to trustees in accordance with the indemnity provisions of the trust deed.
What is not covered by management liability insurance?
Policy inclusions and coverage limits will vary between different insurers and different policies.
Examples of typical exclusions include:
- Fraud or dishonesty
- Pending or prior claims or litigation
- Asbestos-related liabilities
To learn more about exclusions, deductibles, excesses and limits that may apply to your specific policy, speak to your insurance broker or read the product disclosure statement.
The Marsh Insurance Broker Value
Your trusted broker
Marsh’s team of professional insurance brokers and risk advisors are dedicated to helping small to medium businesses across Australia. We help our clients identify and arrange suitable management liability insurance cover and provide advice and recommendations to strengthen their risk management.
Our dedicated team of insurance brokers across Australia can utilise their localised industry experience and insights to negotiate competitive premiums and coverage to deliver value to your business. As part of our service offering, we pair each client with an insurance broker whose experience aligns with the risk profile of their business.
In addition to arranging quotes and placing policies, Marsh can also provide claims advocacy and support. Our team can assist you when making claims by helping to manage, negotiate and settle claims with insurers on your behalf. At every step of the way we strive to deliver a simple client experience.
Is management liability insurance the same as public liability?
Management liability and public liability are two separate insurances. Public liability protects a business from the financial cost of third party injury and property damage claims. Even if not at fault, the legal costs of defending yourself or your business can be significant and put your personal assets at stake if you are not insured. Public liability insurance is compulsory for certain types of businesses.
Find out more about public liability insurance here or speak to your insurance broker.
Is management liability insurance the same as professional indemnity?
Management liability insurance and professional indemnity are often confused but the two are not the same. To put it simply, management liability insurance helps cover the management of a business, whereas professional indemnity insurance helps cover the services and advice offered by a business and its employees.
Find out more about professional indemnity insurance here or speak to your insurance broker.
What is the difference between management liability and association liability?
They are two separate policies. Association liability insurance is designed to cover not-for-profit and charitable associations while a management liability policy provides cover for private companies. An association liability policy may also include professional indemnity cover but a management liability policy will not.
How much does management liability insurance cost?
There are a variety of factors that can affect the cost of management liability insurance. These factors include the size, revenue and extent of risk exposures your business may face.
It is important to ensure that when requesting a quote, you accurately declare the relevant values so the correct premium and cover for your business can be arranged.
Speak to one of our experienced advisors to see if a management liability policy is relevant for your business.
What is a run-off period?
Even when a business has ceased trading or is being acquired, liability continues to exist for a period of up to six years (in line with the statute of limitations). A run-off period is a provision in a policy that helps protect the insureds from claims, even after they have left the business, for a specified period of time.
Additional Industries we service
Marsh makes no representation or warranty concerning the application of policy wordings or the financial condition or solvency of insurers or re-insurers. Marsh makes no assurances regarding the availability, cost, or terms of insurance coverage.
Marsh Advantage Insurance Pty Ltd (ABN 31 081 358 303, AFSL 238369) (“MAI”) arrange this insurance and is not the insurer. The Discretionary Trust Arrangement is issued by the Trustee, JLT Group Services Pty Ltd (ABN 26 004 485 214, AFSL 417964) (“JGS”). JGS is part of the Marsh group of companies. Any advice in relation to the Discretionary Trust Arrangement is provided by JLT Risk Solutions Pty Ltd (ABN 69 009 098 864, AFSL 226 827) which is a related entity of MAI. The cover provided by the Discretionary Trust Arrangement is subject to the Trustee’s discretion and/or the relevant policy terms, conditions and exclusions. This website contains general information, does not take into account your individual objectives, financial situation or needs and may not suit your personal circumstances. For full details of the terms, conditions and limitations of the covers and before making any decision about whether to acquire a product, refer to the specific policy wordings and/or Product Disclosure Statements available from Marsh Advantage Insurance on request.