The Difference Between Management Liability & D&O Insurance
When you’ve worked in the field of commercial insurance for any period of time, a question you’re likely to have heard more than most is what the difference is between Management Liability Insurance and Directors & Officers Insurance. After all, both play critical roles in safeguarding the interests of a company and its management, and – outwardly at least – there appears to be a fair bit of overlap. In which case, do you need both policies or will one cover the needs of both? Our team of commercial insurance specialists are here to explain.
Directors & Officers Insurance Explained
Much as the name suggests, Directors & Officers Insurance – often known as D&O insurance for short – is a type of commercial cover focusing on the protection of the personal assets of a company’s directors and officers. More specifically, this covers them in the event they are sued for alleged wrongful acts while managing the company. This can be of particular importance to businesses because it addresses claims made directly against the leaders of the organisation. Considering these claims can arise from various sources – shareholders, regulators, competitors, creditors, even employees – it often pays to be protected.
Management Liability Insurance Explained
Management Liability Insurance – or MLI – is a broader, more comprehensive package that encompasses several types of coverage in one. Not only does this include protection for the individual directors and officers, but also the company itself, and from a wider range of risks: administrative, financial, and legal. Management Liability Insurance will typically include a form of D&O insurance as a component, but it can also cover other areas such as employment practices liability, fiduciary liability, and crime insurance.
The comprehensive nature of Management Liability Insurance makes it an attractive option for businesses looking for a holistic approach to managing risks. It addresses the gaps that might not be covered by a standalone D&O policy, spanning across various potential liabilities that could impact both the management team and the organisation’s financial health.
MLI and D&O Insurance – Which Do You Need?
The primary difference between Management Liability Insurance and Directors & Officers Insurance lies in the scope of coverage. While D&O insurance is narrowly focused on the personal liability of directors and officers, MLI provides a broader package that includes D&O as well as other coverages that protect the company itself.
With this in mind, which type of coverage you need will come down to the unique requirements of your business. For organisations seeking a wide-ranging solution that addresses multiple facets of risk, Management Liability Insurance is likely to be the preferable choice. However, organisations looking for specialised protection for their directors and officers might opt for a standalone D&O policy for more focused coverage.
Specialist Commercial Insurance from Higos
For businesses seeking tailored solutions that cater to their unique risks and challenges, exploring bespoke MLI and D&O insurance policies with Higos can provide the protection necessary for peace of mind. As a chartered insurance broker, we have years of experience working with a wide range of insurance providers. Our team will get to know the ins and outs of your business, identifying each risk relevant to your organisation, before tailoring a quote that covers each of your needs.
If you’re interested in our management liability insurance services and would like a quote, don’t hesitate to get in contact. Our team of friendly experts are always on hand to help and answer any questions. For management liability, it has to be Higos.