Management Liability is a package policy that includes cover for:
- Directors & Officers Liability (alleged breaches in the management of the company)
- Employment Practices Liability (allegations by past, current or potential employees of harassment, bullying, unfair dismissal etc)
- Statutory Liability (insurable fines and penalties)
- Crime (particularly employee theft)
Cover is for both defence costs and damages if awarded.
This type of policy is design for small to medium businesses and offers a remarkably broad range of cover.
The most common claims under Management Liability policies are generally Employment Practices Liability (EPL) and Crime claims. Many business owners believe that because they have a good relationship with their staff that they won’t have an EPL claim. However, these claims can come from prospective employees ie people who you have interviewed for a position who were subsequently unsuccessful and are then alleging discrimination. Furthermore, many EPL claims arise from one staff member bullying or harassing another. The most critical point about Employment Practices Liability is that as a business owner you may have done absolutely nothing wrong but an employee can still make an allegation against you. As soon as that allegation is made you are likely up for substantial legal costs to defend yourself. It is these defence costs that account for the majority of EPL claims.
As insurance advisers we see many terrible claims circumstances, however one of the worst for businesses is employee theft. It is astounding how often we hear of an embezzler “they were my most trusted employee” and “they’ve been with us for 10 years”. The emotional cost in addition to the financial cost of employee theft is substantial, and made worse in situations where the financial cost is uninsured.
Due to the breadth of cover provided by Management Liability policies, the relative cost-effectiveness of them and the frequency of claims for these types of policies, we consider this an essential must-have policy for every small to medium business.