Managers are typically quite familiar with the tangible risks their business needs to cover. Events like fire, burglary and personal injuries are readily envisaged, and easy to cover with insurance. But when it comes to intangibles, experience shows that managers are far less likely to have a clear appreciation of the risks to which they are exposed. One of the most difficult areas of risk is their potential personal liability to third parties for losses which are a consequence of their acts or negligence.
Traditionally, professional liability, management liability and directors’ liability have been treated as separate areas of risk. Each of these, however, relates to the diligence and fiduciary conduct of a company’s senior executives and corporate officers. These days, businesses are turning in increasing numbers to insurance policies which combine these risks in a single policy unit, in the form of “Management Liability” insurance.
What is “Management Liability” Cover?
Ex Officio Liability – this affects directors, company secretaries and other company officers who have legal duties to their company. These can make them personally liable to shareholders and other third parties for losses or damage sustained as a result of their negligence or misconduct.
Professional Liability – Anyone giving advice in a professional capacity may be liable for the damaging consequences to third parties of following it. In a similar way, services you provide in a professional capacity oblige you to be responsibility for their quality. If a third party suffers damage caused by defects in your service, you may be held liable.
Employer Liability – employees may have a claim against the officers of the company for which they work if they feel unfairly dealt with. Such claims can be very expensive to defend, even if they are eventually rejected can seriously damage a business.
A sound Management Liability Insurance policy protects the managers personally from the costs of defending claims and, if the defence is unsuccessful, meeting them.
To ensure your management liability insurance meets your obligations, and to protect your personal wealth, give Sydney Insurance Brokers a call today and talk to one of our management liability specialists.