Management liability insurance can protect your business and personal assets

What is Management Liability Insurance?

When your running a business, you may be personally liable for any actual or alleged breaches of the Corporations Act and its not just large companies that are exposed -small and medium businesses owners and officers could be at risk as well.

Management liability Insurance covers the cost of defending directors, managers and employee’s against any claims that are a result of their actions or decisions.

Why do I need it ?

If you are faced with unexpected liability costs, Management liability insurance can protect your business and personal assets, such as your home, from being sold to cover the cost of paying claims.

Penalties awarded against companies and its directors or officers for work health and safety breaches have increased by 43% to $22,3 million in one year. Penalties now average $62,000 per company

(Safe Work Australia, key Work Health Safety Statistics 2014)

Many businesses think it wont happen to them, but statistics show otherwise. In fact


The likelihood of a claim that could be covered by a Management Liability policy has tripled in the last 5 years, with 50% of notifications resulting in a claim. ( Chubb 2016 private company risk survey )

The most common claims are employment practices like bullying, harassment and wrongful dismissal. ( Chubb 2016 private company risk survey )

Major claims by amount relate to crime – including employee fraud. ( Chubb 2016 private company risk survey )

What Can it Cover?

Management Liability Insurance polices vary in benefits they provide. To give you idea, here’s the type of cover that your policy may include:

Type of Cover

Potential Benefits

Employment practice Liability

Covers payouts for claims of employment, breaches such as wrongful dismissal, bullying or discrimination.

Directors and Officers Liability

Protects your proprietary limited company ‘s past, present and future directors. Officers and managers against a claims of wrongful acts, such as misrepresentation or breach of duty (subject to business size )


Protects your business against claims such as employee or third party fraud ( not all criminal activity is covered )

Corporate Liability

Covers costs that your business would incur  if you need to defend and settle claims from outside parties alleging wrongful conduct, as well as investigation  into the affairs of the company.

Statutory Liability

Covers the cost of defence, fines and penalties under some statutes (eg Work Health and Safety )

Defence Costs

Covers your Legal Costs if your business ends up in court.

What Usually Isn't Covered?

Exclusions and the excess you needs pay can vary greatly depending on your insurer. Generally policy wont cover :

  • Cyber crime, unless specifically set out in your policy ( you can get cover extensions in some cases )
  • Employee entitlements
  • Property Damage or bodily injury

There are exclusions which we can advise you on selection of insurer best suiting your requirements.

Case study

A former employee claims they were wrongfully dismissed from your business because they were unwell at the time their position was terminated.

They want to be reinstated to their role and remunerated for their loss of income while they were out of work. After numerous unsuccessful conciliation attempts, the matter is brought before a court and you have to pay damages to your former employee.

A Management Liability policy allows you to recover some or all of these cost so you can continue to run your business without having to sell your business or personal assests. Depending on your policy, you may be able to make a claim for your legal defence costs, as well as the amount paid to your former employee.

A product disclosure statement (PDS) is available from us. You should consider the PDS in deciding whether to acquire or continue to hold, business insurance.

Important note: This information is provided to assist you in understanding the terms, implications and common considerations with this type of insurance. It does not constitute advice, and is not complete, so please discuss the full details with us.

Get in Touch Today to see how we can help.