Do I Need Management Liability Insurance?
Management Liability Insurance
At Higos, we understand we live in an incredibly litigious society and claims of wrongdoing or legal action against directors and officers and their companies are becoming progressively more common. If things go wrong and you're not thoroughly protected your personal assets as a director and officer and the company as a whole could become vulnerable and left with significant financial loss.
What is Management Liability Insurance?
Management Liability Insurance can be comprised of Directors and Officers Liability, Corporate Legal Liability and Employment Practice Liability under one policy; providing comprehensive protection against claims of wrongdoing; or legal action taken against you personally and against your company by your clients, employees and business stakeholders. These can include legal and criminal claims, employment practice claims, personal investigations by regulators (such as Health & Safety) or claims by shareholders where investments have been devalued by you or your companies actions.
What is covered by Management Liability Insurance?
Management Liability Insurance is comprised of three main areas of cover under one policy, these include Directors and Officers Liability, Corporate Legal Liability and Employment Practice Liability.
What is Directors & Officers Liability?
Directors and officers Liability (also known as D&O) provides cover for individuals as a director or an officer of a business from a personal loss against claims or legal actions taken against you personally by your clients, employees and business stakeholders. These can include:
- Employment practice claims,
- Personal investigations
- Breach of trust
- Breach of legislation
- Wrongful trading
What is Corporate Legal Liability?
Corporate Legal Liability is considered an extension of directors and officers liability cover, providing cover for criminal claims, unlawful acts and legal action that’s taken against the company as a whole and its employees. Corporate Legal Liability will not cover directors and officers personally as individuals. A company including its employees have their own distinct legal responsibility and are considered as a separate entity from the individual directors and officers who have their own legal responsibility. If a company is faced with prosecution, Corporate Legal Liability can cover the cost for the companies legal defence, legal fees, court fees, settlement fees and investigation fees for claims against the following:
- Employee benefit claims
- Breach of contract
- Breach of duty
- Copyright infringement
- Corporate identity crime
- Health & Safety breach
- Data protection
- Corporate manslaughter
- Corporate homicide
What is Employment Practice Liability?
Employment practice liability provides protection against legal costs and any financial awards for claims arising from a companies employees who’s legal rights have been violated. These can include claims for:
- Employee Discriminatory practices
- Employee Negligence
- Sexual harassment
- Employee Assault
- Breach of employee agreement and contracts
- Wrongful termination without cause
- Unfair disciplinary
- Employee bullying
- Failure of professional opportunities
- Hostile work environment
- Employee retaliation
- Employee benefits
- Negligent employee hiring
- Negligent evaluation
- Wrongful infliction or emotional distress
It’s important to note that Employment Practice Liability will only provide cover for employee practices and disputes and will not cover employee bodily injuries. You would require Employers Liability which can be obtained from a Commercial Liability Insurance policy that includes Employers Liability to cover claims for employee injuries whilst working for your business. If you have employees for your business it is a legal requirement to hold Employers Liability.
Who can make a claim against you?
A claim taken against you personally or your company and employees can arise from the following:
- Vendors and suppliers
- Consumer groups
- Financial regulators
What is the difference between Directors and Officers Insurance and Management Liability Insurance?
A Directors & Officers Insurance policy can cover you personally as a director & officer from personal losses against claims of wrongdoing or legal action taken against you as an individual. However a standalone Directors & Officers Insurance policy will not cover claims taken against your company as a whole. You would require a Management Liability Insurance policy to extend cover to claims against the company as a whole. Management Liability Insurance is similar to Directors and Officers Insurance but includes cover for Corporate Legal Liability which will provide cover for the company as a whole and you personally.