As a business owner, manager, director or officer, you can be liable for a range of issues arising from your decisions and actions. This can range from negligent errors and inaccurate disclosure to employment practices and HR issues. In today’s increasingly complex and litigious culture, businesses are at greater risk than ever of liabilities and litigation, which means having the correct level of insurance in place is essential.

This is known as Management Liability cover, offering full protection should the worst happen and you need to cover the cost of investigating, defending or compensating claims made against your business’s directors and key manager or officers for alleged wrongful acts.

Although not a legal requirement, such cover is essential in the current landscape. Here, we provide five good reasons why you should consider having Management Liability Cover.

1. Your personal assets are at risk

If you are involved in a claim, you could become personally liable for any damages.

2. Defending a legal action can be costs

Legal costs for defending a company or individual director can run into thousands of pounds.

3. Director and officer claims are not covered in any other liability policy

Professional Indemnity or other similar policies do not cover alleged misconduct by Directors and Officers.

4. Protection in case of bankruptcy or insolvency

If you are faced with insolvency or bankruptcy, and you don’t have Management Liability cover in place, creditors could sue you personally if they feel you did not act in the business’s best interest.

5. Employment Practice Claims

Employment practice claims, such as harassment or wrongful dismissal, are on the increase and can result in large settlements being made.

Common risks

Typical risk scenarios include breaches of duty of care, breach of trust, negligent errors, defamation, health & safety failure, causing pollution, mismanagement of pension schemes,  inaccurate or inadequate disclosure, failure to comply with regulations or law, corporate manslaughter, creditor claims, competitor claims, employment practices and HR issues. (Fraudulent or criminal actions are not covered.)

How cover works

Management Liability cover reimburses the defence costs incurred by company directors and officers in defending claims by shareholders or other third parties for alleged wrongdoing. Along with defence costs, it also covers monetary damages, settlements and awards resulting from the claim. In other words, whether the case is upheld or not, the insurance covers costs involving legal fees or compensation, thereby protecting the individual manager’s personal assets.

It’s also important to point out that the insurance covers current, future and past directors and officers, covering the individual for acts carried out while in that position. So, even if they are no longer in the position, they are still covered for a claim made during the policy period for any alleged wrongdoing. 

Talk to Melville Burbage

We have many years’ experience arranging Management Liability cover and can advise on the level of cover you need to have in place, with indemnity limits up to £1m, ensuring you are fully protected against any unexpected liabilities or litigation and expensive legal costs. We fully recommend this cover for limited companies, although it is not applicable if you are a sole trader.  

If you would like to learn more about this policy and how it can protect and benefit you, please don’t hesitate to contact us just call 01635 43880 or email: info@melvilleburbage.co.uk.