Management liability insurance ensures you and the organisation are protected against the risks involved in its management.
For instance, if you’re accused of some wrongdoing or mistaken management practices, then this type of insurance protection covers you from paying hefty out-of-pocket sums of money.
Check out MBA Insurance Services’ fantastic explanation of management liability insurance here.
What Happens If You Don’t Have Management Liability Insurance?
Management liability insurance is designed to cover any risks and issues faced by senior or mid-level management of an organisation, whether you are a director, an office manager or a senior executive – covering factors like management, governance, hiring and finance within an organisation.
Your organisation and executives can sometimes face prosecution for their roles as officers, managers and executives.
Here are some common issues that you could be taken to court for:
- Mistakes while filing your tax returns
- Budget errors – poor accounting and monetary management
- Asset misappropriation – physical and financial
- Wrongful termination of employment
Without satisfactory security like management liability insurance, a business owner could potentially lose thousands and millions of dollars in liability claims, which will eventually result in massive losses to the bottom line of the business – running the risk of shutting it down prematurely.
Legal costs to to defend charges like wrongful actions or business malpractices can be financially devastating for you and your organisation.
This type of insurance protection will not only shield your business, but also your overall lifestyle from financial ruin.
Unlike professional indemnity insurance that handles claims made from third parties, management liability insurance is specifically meant to protect you from claims of mismanagement and malpractices – especially focussed on the way managers and owners run a company.
This type of insurance protection covers the following details:
- Claimant costs against you
- Defense costs and other legal costs
- Investigation costs
- Penalties and fines
These costs may not seem significant, but they can really add up in the long run and can leave you in financial ruin if you don’t attempt to protect yourself with the right type of insurance.
What Does This Type Of Insurance Cover?
Management liability insurance normally covers the following risks associated with management liability:
Liability For Senior Officers And Directors Of The Company
Senior directors and officers of a company can face all types of liabilities when it comes to managing a company, and can held responsible for personal and corporate issues.
This insurance provides cover for claims made against them for any alleged wrong doings while performing their duties.
Employment Practice Liability
Employment practice liability provides cover to employers for any wrongful acts against employment handling, dismissals, payment, harassment and much more.
For instance, if any employee is bullied, treated unfairly or even discriminated against at your workplace, he or she can file a claim against your company and you may be held liable.
This type of risk could potentially occur in any environment, so it’s important for employers to properly protect themselves.
Corporate Legal Liability
This type of of insurance protection covers claims made against the company as a whole for any alleged or even actual wrong doings.
In this instance, even if a director or officer committed the wrongful act, the first claim will be brought against the company, so having this level of protection is vital for any business.
Statutory liability provides cover to specific individuals within an organisation, so that the costs of defense and investigations are taken care of.
Statutory liability can also make payments for fines and penalties resulting from statutory breaches, which could be related to employment issues, remuneration concerns and safety hazards.
Crime liability covers the company in case of acts such as stealing of stock or swindling money from the coffers.
For instance, if an employee stole products paid for by customers, the customer could hold your company responsible.
Without this type of insurance protection, you could end up paying hefty sums of money out of your own pocket.
Apart from these options, this type of insurance also covers costs involved with legal representation, public relations management, tax investigation, crisis handling, external communication and much more to ensure that a company remains solvent during these difficult times.
Any person can take action against companies or organisations – from regulators, competitors and employees to shareholders, creditors and clients.
To find out more about management liability insurance, give Oracle Group a call today.
Ultimately, management liability insurance is designed to cover the costs incurred by a company in case an unexpected crisis occurs.