In today’s ever-demanding business environment, the respective business entity, it’s directors and officers are under increasing scrutiny, and it has become common place for allegations of wrongful acts to be made.
The directors and officers in your company are in a position of significant responsibility. Whichever sector your company operates in, the directors and officers, including managers and supervisors can face allegations and claims for which they may be held personally liable. Even in a company with a limited liability status, personal liability is unlimited.
Any allegations of wrongdoing need to be investigated and defended accordingly. The legal defence costs to defend allegations of wrongful acts, (aside from any actual penalty if found guilty), can be financially crippling for businesses and individuals, even if the case doesn’t reach court. This means directors and officers personal finances are exposed and at risk.
What does Management Liability Insurance cover?
Management Liability Insurance is designed to respond and protect you and the company against the risks and exposures of running the company (i.e your liability for mismanagement). Without adequate protection you could risk losing, not only your business, but also your personal assets such as the family home should the penalty amount warrant such sums. A Management Liability policy protects you personally, and therefore your wealth and lifestyle you have worked so hard to achieve. Just some of the extensive coverage points of Management Liability are noted below:
- Misleading & Deceptive Conduct
- Harassment & Bullying
- Unfair Dismissal
- Sexual Harassment
- Wrongful Termination
- Employment Practices
- ATO Tax-Audit Costs
- Occupational Health & Safety Defence Costs*
- Statutory Liability Costs
- Official Investigations and Inquiries
- Entity Cover
*(You could be held liable for OH&S breach as a result of an Employee’s Workers Compensation claim, which Workers Compensation does not respond)
Examples of company and director litigation include:
- In Wagga Wagga the district court awarded $339,722 to a clerk for psychiatric injury stemming from workplace bullying finding her employer had been “negligently passive”.
- The Supreme Court of Victoria imposed $1.36 million in damages in the case of a female labourer, who over a 2 year period, was shown pornographic material, slapped on the bottom, grabbed from behind, had a sex act simulated on her and told by a male colleague that he would follow her home.
- Last month in Victoria a builder was convicted and fined a total of $880,000 over the death of an apprentice. The company was fined $700,000 and the owner $180,000.
- In August 2017, an education company and owner were fined $8.5m for consumer law breaches. The company was found to have contravened Australian Consumer Law through misleading and unconscionable conduct. The company was fined $8m and the director was fined an additional $500,000.
- In May of this year, a WGA Pty Ltd was fined $1m after a contractor sustained an electric shock while working on a window ledge at a residential-apartment construction site in South Hurstville.
- Earlier this year, in March 2017, a Perth company faced Court over Fair Work Ombudsman allegations of pregnancy discrimination. The director is facing penalties of up to $10,800 per contravention and the company faces penalties of up to $54,000 per contravention.
As insurance professionals, Mitchell Insurance Management can walk through the numerous coverage points Management Liability are designed to respond to. We can help to mitigate your risks and minimise what can be a significant financial impact on your business or your personal assets should the unexpected happen. If you would like to know more or discuss this further please contact us.