D&O and Management Liability Insurance pay the personal legal costs and court-awarded damages awarded against directors, officers, and senior managers for actual or alleged acts, errors, or omissions in relation to the performance of work-related duties and responsibilities.
Without insurance in place, directors, managers, and senior staff can be exposed to significant personal legal costs in defending an action, in addition to any damages awarded if found to have been at fault. These amounts can easily range from tens of thousands to hundreds of thousands of dollars, a significant financial burden for most people.
The policy will also reimburse costs related to the company for tax audit costs, fraud-related losses, and losses due to employee theft.
Overview
Cover: legal defence costs and any damages awarded to the company directors, officers, and managers, as well as the company, for actual or alleged acts, errors, or omissions arising out of the management of the company.
Optional covers:
OH&S fines and penalties cover legal defence costs only unless allowed by the state or
Territory laws. A key benefit is legal defence costs are covered in the event of an industrial
manslaughter charge, which can result in significant jail time.
Employment Practices: covers claims related to employment practices, discrimination: being allegations of unfair treatment based on race, gender, age etc; workplace harassment, including sexual harassment; wrongful termination.
Crime: covers losses, including theft or misappropriation of money or assets by employees, contractors or suppliers.
Statutory Liability: covers fines and penalties related to pollution, WH&S and the many other laws that apply to management or the company.
Key exclusions:
- Major shareholder and beneficiaries’ exclusion, insured vs insured claims;
- Insolvency exclusion;
- Fines & Penalties are not insured (legal defence cover remains in place), in states and territories that prohibit this type of insurance.
- Social engineering financial losses, unless they are specifically agreed. This is direct financial loss (under the Crime section) arising out of the voluntary transfer of money by deception (social engineering fraud).
Conclusion
Management liability insurance is essential for protecting both the directors, officers and senior management personal assets, as well as the company, against legal action and any court-awarded damages related to the operation of the business, as well as financial losses from internal and external crime. If you want professional advice in tailoring a D&O or Management Liability insurance for your business, talk to an insurance professional today.