Management Liability Insurance is a comprehensive insurance cover for Private companies as well as Sole Traders and Partnerships. It provides protection to directors and management as well as the insured Company for most of the major breaches and risks that might occur in the day to day running of the business.
It is important to note that it is complex, needs to be well structured and tailored to each individual business.
Management Liability Insurance covers the 5 major areas of exposure.
- Directors and Officer’s Liability and Company Reimbursement – cover for claims against directors, officers or employees of the company for any actual or alleged act, error, omission, breach of duty, breach of trust, breach of authority, misstatement or misleading statement by them.
- Statutory Liability – protection against claims made at the company for any actual or alleged act, error, omission or breaches duty; authority; OH&S or safety laws. It also provides cover for a misstatement or misleading statement by the company.
- Employment Practices Liability – protection for the directors and management and the insured entity from claims by past and present employees for actual or alleged breaches of employment laws, harassment, bullying or wrongful dismissal. The employment laws provide some general protection for employees and this policy provides that general protection for the employers.
- Superannuation Trustee Liability – security for the trustees, employees, the business and the fund itself against claims brought in relation to wrongful acts, whether actual or alleged. Don’t think your small business is a trustee, well how long do you hold staff Superannuation money on behalf of your staff before it is paid into the fund? You just became a trustee!
- Employee Theft – covers direct financial loss to the company resulting from fraud, dishonesty or theft committed by an employee, acting alone or in collusion with others. Not just for money but also property.
Originally, this is a serious consideration for all private companies and as your business gets bigger your exposure continues to grow. Recently, this policy has been extended to Sole Traders and Partnerships as their exposures are the same.
Just because they are not Pty Ltd doesn’t mean they are not equally exposed. In our experience that is where complexity kicks in and despite best intentions, things get missed.
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