Corporate litigation is on the rise In Australia, causing many Small to Medium Enterprises (SMEs) to assess their risk management and insurance coverage. Unfortunately, the majority of people are unaware of how important Management Liability Insurance is for small firms. In essence, it covers the costs of lawsuits brought against a company owing to the misbehaviour of its directors, managers, and workers.
Conflicts in the workplace are becoming more common, which is exacerbated by the current market conditions caused by the worldwide pandemic. For this reason, legal action against SMEs can be financially disastrous for both the company and individual employers.
The costs of defending directors, managers, and workers accused of wrongdoing are covered by Management Liability Insurance. This is why it’s necessary to have the right policy in place to protect the company's stakeholders against fines, penalties, and defence costs.
Keep in mind that managers and owners may even be held personally accountable, putting your investments at risk. Management responsibilities extend not only to your company but also to your personal assets and family. Read on to learn more about the importance of having Management Liability Insurance.
Understanding Management Liability Insurance
Clients, shareholders, creditors, competitors, and even regulatory agencies are reporting more instances of mismanagement, compliance, and law enforcement violations now than a few years ago. Even if the charges are unfounded, the costs of defending oneself in court can ruin a company and destroy one's reputation.
While workplace bullying and wrongful termination are the most typical types of claims, Management Liability Insurance can be customised to cover a wide range of mismanagement claims unique to your industry. You can defend your company against allegations of wrongdoing by prior, current, and prospective directors to various offenses.
For example, you can set provisions and protection against fraud committed by an employee or a third party, against legal violations related to business and statutory accountability for corporate wrongdoing, and cases where directors and officers engage in false or misleading behaviour. Furthermore, legal bills for defending yourself in court, as well as charges for attending an inquiry or investigation into the operation of the business, can all be reimbursed.
Management Liability vs. Professional Indemnity
The mere possession of Professional Indemnity Insurance does not preclude the requirement for Management Liability Insurance. As you can see, Professional Indemnity Insurance protects a company from third-party claims for financial damages caused by inadequate professional advice. Management Liability Insurance, on the other hand, shields a company from third-party claims for financial loss caused by poor management practices.
To further illustrate, Professional Indemnity Insurance protects against business activities. Meanwhile, Management Liability Insurance protects against business operations. Each plan provides coverage for a certain lawsuit that could financially harm your company. If a client sues not just your firm, but also its directors, Professional Indemnity Insurance is meaningless.
If you do not currently have Management Liability Insurance, contact an agent who can tailor coverage to your specific requirements. If the charges are true, you may suffer severe financial losses while seeking to fund your own defence and any subsequent compensation claims.
While internal issues are rising in businesses, it’s important not to wait for situations to get worse. As a responsible manager or business owner, you must equip your in-house policies with Management Liability Insurance plans that could safeguard the work culture and environment of your business. Furthermore, this type of insurance can save your company from financial pitfalls and could secure a decent reputation within the industry.
Are you looking for an insurance specialist in the Gold Coast? Contact New Wave Insurance to get the right plan and insurance for your assets. Working with us means we'll do the work effectively so you can save time and money! What are you waiting for? Request a FREE, no-obligation quote right now!