All businesses face risks that can occur as a result of mismanagement. Even with a great management team, issues may arise that can result in disputes with staff, contractors or business associates. There may be breaches of legislation, claims of wrongful acts or even fraud. Further, these issues can all incur costs associated with investigation, or defense of the incident. They may lead to hefty fines, penalties, or legal costs.
The below article will provide some guidance on insurance that can safeguard or support your business during these occurrences. This insurance is known as Management Liability Insurance.
What is management liability insurance?
There is a suite of different insurance covers that are designed to protect directors and senior managers against risks associated with allegations of mismanagement. These suites of insurance coverages are combined into one, which we call Management Liability Insurance. This insurance falls into three main categories:
This article will focus primarily on what is covered by Employment Practice Liability Insurance.
Who needs management liability insurance?
“I’m just a small business owner, I don’t need this”.
No matter how big or how small your business is, Management Liability Insurance is important to protect you as a business owner against a potentially large claim.
One of the most common claims we see under a Management Liability Insurance Policy is unfair dismissal. This type of coverage may provide financial protection if a wrong decision is made, or the incorrect process of dismissal is followed. Poorly executed decisions often lead to large consequences when running a business and it is important to make sure you are protected.
Below are examples of when a Management Liability Insurance Policy works as a safeguard:
An employee is dismissed for non-attendance. This employee is pregnant, but management was unaware at the time of dismissal. If this is not reversed complications will arise.
An employee is dismissed after lodging complaints of bullying and aggressive conduct by a work colleague.
Harassment and Discrimination of Third Parties
A service provider makes allegations of harassment and discrimination against the company. Two employees are named. The company is found to be liable for the conduct.
The above examples are quite common in the workplace. There are many laws and rules to abide by when it comes to managing staff. Therefore, it’s important to have a safeguard such as Management Liability Insurance to assist if any of the above issues arise within your business.
Contact us today
For a conversation worth having, contact us today on 1300 305 834 or enquire via our website contact form.
Cover is subject to the policy terms, conditions, and exclusions.
This information is general in nature. To read our general advice warning click here.
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