Management Liability Insurance Protects you from Operational Risks

Employers generally mean to treat their workers well, but when the interests of management and staff collide, things can get legally messy and business can grind to a standstill. This is why it is necessary to have a management liability insurance policy in place. Steven McInerney writes about the coverage of this policy in his article for Inside Small Business:

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The exposures with managing a business are vast and varied. All companies (should) insure the tangible exposures of property damage and bodily injury, via their business insurance policy. However, the key economic exposure of the ‘management risk’ often remains uninsured.

When a breach of company law or regulation is alleged, the focus is on your conduct as a manager and as a company.

Management liability protects both the individuals and the company in relation to exposures associated with managing a company.

Wrongful acts by Directors and Officers

According to statistics, there are over 700 Commonwealth, State, and Territory Laws that impose personal liability on 2.1 million company directors in Australia. This means that key company individuals are automatically liable for any wrongful act resulting from their negligence or breach of duty, including legal action brought against them by unions and other labour advocates.

Dishonest acts by employees

These may include embezzlement of money or outright theft of products. It has been reported that Australian businesses lose upwards of $250 million to fraud. Out of this amount, 43% is never recovered, 49% is partially recovered, and only 8% is ever fully recovered.

Employee claims

Disgruntled employees will more often than not sue the company for anything ranging from harassment and bullying to wrongful dismissal. More than half of the Management Liability claims filed are related to employment practices. Under the Fair Work Act, there are more than 16,000 unfair dismissal claims per year processed, with the average cost of each claims in excess of $50,000.

Statutory fines and penalties

The most common claim under the Statutory Liability coverage involves charges of Workplace Health and Safety (WH & S) violations. Management’s duty is to ensure the workplace is safe by means of a Workers Health and Safety audit and an annual safety measures report. Brokers who offer management liability insurance in Buderim and the Sunshine Coast, like Insuring theProduct, help their clients find the policy that will promote these and ensure that all their bases are covered.

(Article excerpt and image from “Management liability 101”, 29 March 2012, Inside Small Business)

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