Conflicts arising from the workplace have become increasingly common, in particular with current market conditions affected by the global pandemic. SMEs are subject to legal action which can be financially devastating for both the business and its executives. The need for Management Liability insurance has grown in importance.
Management liability insurance covers the costs of defending directors, managers, and employees against any claims that are the result of their actions or decisions. Having the appropriate policy allows the aforementioned stakeholders of a company to be protected against fines, penalty compensation, and defence costs. Managers and owners can also be held personally liable, which puts your personal assets at risk. Management liability insurance also extends to protecting your wealth and your family’s security, not just your company.
While policies do vary in the benefits they provide, the most common coverage includes employment practice liability, directors’ and officers’ liability, crime, corporate liability, statutory liability, and defence costs.
Even if claims made against you and your business aren’t founded, the legal costs of defending these claims can be financially crippling for businesses and individuals. In fact, 1 out of 4 private companies have reported experiencing a D&O loss in the last 3 years. On average, the reported loss from such claims amounted to $387K, with the maximum loss being $17M!
Unfortunately, when it comes to management liability your turnover or industry won’t matter much – you will have legal obligations to hold yourself accountable. If you’re a business owner or senior manager it’s your responsibility to ensure that your business meets them. Management liability insurance is designed to ensure that even the most prepared and well-run businesses are covered for any potential mishaps.