Management Liability Insurance

Management Liability is an insurance product that rolls a range of important insurance products into one comprehensive cover for a range of management exposures. The sole purpose being to protect both the directors and the company against claims made by or resulting from Occupational Health & Safety and legislative breaches, Government agencies, shareholders, creditors, staff or even competitors. The range of insurance covers under the policy includes:

Directors and Officers Insurance

This covers directors, officers or employees (insured persons) of the company for any actual or alleged act, error, omission, breach of duty or trust, breach of authority, misstatement or misleading statement by them. The cover includes investigation and defence costs. Scenario example: A small family manufacturing company was forced into liquidation after plans to expand the company staled when they were unable to secure debts to cover costs. The husband and wife directors were sued by their creditors for incurring debts when they were unable to pay them. It was alleged that the company was trading whilst insolvent for some time.

Employment Liability

This covers both the directors and company for employment related claims such as:

  1. Failure to employ or promote someone,
  2. Sexual harassment
  3. Work place bullying and
  4. Discrimination at work

Scenario example: A small retail chain was forced to make some redundancies due to a downturn in retail figures. Whilst all appropriate procedures were followed in regards to these redundancies, some employees felt they were being discriminated against due to their mature age and made a claim against the company for discrimination.

Statutory Liability

This cover protects the directors and officers and the company against fines and penalties imposed by a regulatory or government body for a breach of statutory requirements. Scenario example: An importer and retailer of gifts was investigated and found guilty of selling certain items without the required safety labels attached.

Employee Crime

This cover protects the business against theft of money, securities and other tangible properties and includes the reimbursement of the amount of loss sustained, as well as fees, costs and expenses of fraud investigation. It is aimed at theft by staff but can be extended to third parties. Scenario example: An employee at a fashion shop who was responsible for depositing the day’s takings with the bank was found to be altering the bank deposit slips following sign off from their manager. The altered amount was both banked and recorded by the employee so it was not picked up by the monthly bank account reconciliation. This continued for a year before it was uncovered.

Superannuation Trustee Liability

This cover protects the trustee for breach of their professional duty in the management of the company superfund. Scenario example: A director fraudulently misappropriated money earmarked for employee’s superannuation contributions. Upon discovery, employees claimed against the director (including innocent directors) and also the company.

Legal Expenses

This section covers any solicitor’s reasonable costs, expenses and disbursements incurred by your company in investigating or defending a claim for any Wrongful Act. Most insurers will define such an act to include any error, misstatement , act , omission, negligence, breach of duty, libel, slander, breach of contract, breach of warranty, wrongful trading, or other act actually allegedly committed or attempted by Your company in connection with your business.

So why should your business consider this cover?

In the last 10 years we have seen more and more customers take up this product as

  1. it has become more affordable and
  2. customer’s are realising the importance of such covers in business with headlines such as the following appearing more frequently in the media.

Media release – Fair work Ombudsman

136 Alice Springs hospitality staff share almost $50,000 back-pay

8 March 2012 The Fair Work Ombudsman has recovered almost $50,000 back-pay for 136 hospitality workers in Alice Springs. Fair Work inspectors recently door-knocked 11 hospitality businesses in Alice Springs to ensure their compliance with record-keeping and time and wages obligations. Six of the 11 were fully compliant, while five businesses recorded contraventions relating to the underpayment of minimum hourly rates of pay and penalty rates.

Court action over alleged underpayment of young, foreign workers in Brisbane

1 March 2012 The Fair Work Ombudsman is prosecuting the operator of a Brisbane restaurant for allegedly underpaying two young, foreign workers more than $7000. Facing court is Go Yo Trading Pty Ltd, which operates the Ajisen Raman Noodle Restaurant on George Street, in the Brisbane CBD.

Did Charles Gosselin cook the books? TV chef Adriano Zumbo wants justice served up

The celebrity chef who made macarons famous yesterday took centre stage in court after a former employee allegedly stole nearly $20,000 from the pastry maestro. Adriano Zumbo told Sydney‘s Downing Centre local court that his former operations manager Charles Gosselin, 30, ran the three Zumbo stores and was helping to set up the fourth store at The Star casino when the money went missing. Police allege Mr Gosselin stole $18,926.25 over five days in August. Mr Gosselin has pleaded not guilty to two charges of stealing property as a clerk or servant.

How do we add value as an your Insurance Broker?

With years of experience in management liability cover, our staff can assist in choosing the right coverage for you based on your business risk exposures. For example, in your business we may identify Employment Liability incidents as more of a concern than Directors and Officers Liability. We work with you on identifying that exposure, costing it, establishing measures that may be adopted to reduce it and put in place measures to share that exposure and risk so it does not impact greatly on your business in the event of an incident.

*claim examples provided by Lumley Insurance
Contact Us

Shop Insurance – – Business Insurance for Shops is a division of Steadfast Eastern Insurance Brokers P/L AFSL 449768 ABN 13 166 553 671.