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Do You Understand Management Liability Insurance?

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Whitbread recently completed a national series of seminars to Directors of medium to large organisations across Australia. These sessions explored the evolution of Management Liability Insurance, and generated extensive discussion among attendees. Here are some of the key questions that were posed during the seminars.

How does Management Liability differ from Directors and Officers Insurance?

Interestingly, Management Liability has evolved from the Director’s & Officer’s (D&O) Insurance and now encompasses the covers that were previously available under separate policies such as Employment Practices Liability, Fidelity Guarantee (Staff dishonesty), Tax Probe, Statutory Liability and several other sections.

D&O as a separate cover is still required for larger corporations, particularly to ensure that their limit of indemnity under the D&O section is not eroded by claims from the other policy sections.

What are the current claim trends under Management Liability/Directors & Officers Insurance?

You would have noticed that almost on a daily basis you hear or read about a company where a staff member has misappropriated funds, or where there has been either harassment at work or an alleged unfair dismissal.

Other common claims are recoveries by statutory authorities such as workers compensation agencies, who will try to take directors to task for unsafe OH&S practices.

Can all companies be covered?

We can cater for clients of all sizes, and all will have different individual and unique requirements. The best advice we can give is to talk to your insurance broker.

What is not covered by the policy?

Deliberate illegal acts by directors are not covered. This includes the misappropriation of funds by directors.  Further, events that you are already aware of before a policy is taken out are not covered.

What limit of indemnity should we set?

This question really comes down to the “piece of string” principle. As a guide, the more directors there are, the higher the limit of indemnity should be. 

In the event of a major claim against the directors, each director may require their own individual legal advice as each may have different levels of alleged culpability.

For further information about Management Liability Insurance, please contact a Whitbread Insurance specialist on on 1300 424 627.

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This insight article is not intended to be personal advice and you should not rely on it as a substitute for any form of personal advice.  Please contact Whitbread Associates Pty Ltd ABN 69 005 490 228 Licence Number: 229092 trading as Whitbread Insurance Brokers for further information or refer to our website.

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