Insurables — Australian business risk, sourced and dated
Cover type

Management liability insurance: what it covers and who carries it

Cover for company and director exposures such as employment practices, statutory liability and defence costs.

Cover normally bought as part of this policy rather than separately: Statutory liability insurance, Employment practices liability.

Data as at · refreshed by scripts/seed-graph.mjs

In short

  • Management liability covers the exposures that attach to running a company: directors’ conduct, employment practices, statutory investigations and internal theft.
  • It is written for private companies rather than listed ones, and bundles several distinct covers under one schedule.
  • It responds to allegations against people as well as against the company.

Management liability is a package rather than a single cover. It brings together the things that go wrong in the running of a company as opposed to the doing of the work: a director accused of a breach of duty, an employee claim, a regulator asking questions, money going missing.

For small and medium companies it is often the only place these exposures are addressed at all.

Also called: management liability, D&O for SME, directors and officers

What sits under the one schedule

The sections are usually distinct with their own limits: directors and officers liability, employment practices liability, statutory liability, crime or fidelity cover, and company reimbursement.

Because the sections are separate, a business can be well covered for one exposure and barely covered for the next, and the schedule is where that is visible.

  • Directors and officers — allegations of breach of duty against individuals
  • Employment practices — claims by employees, such as unfair dismissal or discrimination allegations
  • Statutory liability — defence costs and, where insurable, penalties
  • Crime or fidelity — theft by employees

Why defence costs dominate

Most of these exposures are resolved without a finding against anyone, and the money is spent on responding: lawyers, investigations, hearings and time. The cover is largely a defence-cost product.

Personal exposure is the reason directors take it seriously. A claim against a director is against them, and a company that cannot indemnify them leaves them personally exposed.

What people get wrong about it

The first error is assuming a company structure alone protects the people running it. Directors owe duties personally, and those duties are enforceable against them.

The second is expecting the employment section to respond to ordinary wage claims, which are usually a contractual and industrial matter rather than an insurable one.

The third is assuming penalties are insurable. Whether a penalty can be insured at all depends on the law creating it, which is why the statutory section is usually about defence costs.

Questions

We are a small family company. Is management liability relevant?
The exposures it addresses attach to having a company and employing people, not to size. Employment claims and regulator investigations are the two that most often reach small companies.
Is this the same as professional indemnity?
No. Professional indemnity responds to failures in the service the business provides to clients. Management liability responds to how the company is run and to claims by employees, regulators and others.

Clauses that turn up in this cover

  • Claims-made basis — A policy that responds to claims first made during the period of insurance, regardless of when the work was done.

Occupations that commonly carry it

Ordered by how central this cover is to each occupation in the graph. A pattern in the data, not a statement that any business is required to hold it.

  • Aged care providers — Approved home and residential care for older people.
  • Financial planners — Personal financial advice provided under an Australian financial services licence.
  • Lawyers — Legal advice and representation delivered by an admitted practitioner.
  • Building inspectors — Pre-purchase, stage and defect inspections, reporting on the condition of a building.
  • Surveyors — Cadastral and construction setting-out surveys, and the plans that depend on them.
  • Accountants — Preparation of accounts, tax returns and advice for businesses and individuals.
  • Bookkeepers — Day-to-day transaction processing, payroll and activity statement preparation.
  • Business consultants — Advice to owners on operations, growth and process, priced on the advice itself.
  • Management consultants — Strategy, organisational and change advice to larger clients under formal engagements.
  • Architects — Registered architectural design, documentation and contract administration.
  • Consulting engineers — Structural, civil and services engineering design and certification.
  • Draftspersons — Technical drawing and documentation for building and manufacturing work.
  • Quantity surveyors — Cost planning, measurement and progress certification on construction projects.
  • Project managers — Client-side management of projects, programmes and delivery teams.
  • Town planners — Planning advice, applications and submissions to consent authorities.
  • Building designers — Residential and light commercial design outside the registered architect pathway.
  • Real estate agents — Licensed sale and leasing of property on behalf of owners.
  • Property managers — Management of rental property, tenancies and trust money on behalf of landlords.
  • Strata managers — Administration of owners corporations, including insurance placement and levies.
  • Mortgage brokers — Credit assistance and loan placement under a credit licence or as a representative.
  • Conveyancers — Licensed transfer of property title and the trust accounting that goes with it.
  • Recruiters — Placement and on-hire of staff, including labour hire into host workplaces.
  • HR consultants — Employment advice, policy and investigations for employer clients.
  • Translators and interpreters — Translation and interpreting services where an error changes the meaning of a document.
  • Virtual assistants — Remote administrative and support services delivered under contract.
  • Travel agents — Booking and packaging of travel, holding client money ahead of departure.
  • Childcare providers — Approved education and care of children, including family day care.
  • Training providers — Delivery of accredited and non-accredited training to workers and businesses.
  • Tutors — Private and small-group tuition delivered in homes, centres or online.
  • IT consultants — Advice, implementation and managed support for business technology.
  • Software developers — Custom software and application development delivered under contract.
  • Web designers — Design and build of websites and online stores, often holding client data and hosting.
  • Builders — Licensed building work as principal contractor on residential or commercial projects.
  • Physiotherapists — Registered physiotherapy assessment and treatment in clinic, home and hospital settings.
  • Chiropractors — Registered chiropractic assessment and manual treatment.
  • Osteopaths — Registered osteopathic assessment and manual treatment.
  • Massage therapists — Remedial and relaxation massage, in clinics and mobile.
  • Psychologists — Registered psychological assessment and therapy.
  • Counsellors — Talking therapies and support delivered outside the registered psychology pathway.
  • Occupational therapists — Registered functional assessment, equipment prescription and home modification advice.
  • Speech pathologists — Assessment and therapy for communication and swallowing.
  • Podiatrists — Registered foot and lower-limb assessment and treatment, including minor procedures.
  • Dietitians — Nutrition assessment and dietary advice for clinical and general clients.
  • Disability support workers — Personal and community support delivered in the participant’s home and community.
  • Support coordinators — Coordination of NDIS plan supports and connection to providers.
  • Nursing agencies — Supply of registered and enrolled nurses to facilities and homes.
  • Dentists — Registered dental practice, including surgery and prosthetics.
  • Veterinarians — Registered veterinary treatment of animals in clinic and on farm.
  • Naturopaths — Natural therapies and nutritional advice outside the registered health professions.
  • Acupuncturists — Registered acupuncture and Chinese medicine practice.
  • Personal trainers — One-to-one and small-group fitness instruction in gyms, parks and homes.
  • Gym operators — Operation of fitness facilities, including unstaffed access hours.
  • Yoga and pilates instructors — Class-based instruction in studios, halls and outdoors.
  • Sports coaches — Coaching of individuals and teams, frequently involving minors.

Sources