If you're a business owner, there are so many things that can go wrong. Good management involves having the foresight to know what these things could be and taking steps to avoid, minimise or mitigate against them.
Your business can be exposed to potential liabilities and associated costs which could arise as a result of possible actions from what we term "mismanagement". Here we'd like to share with you what insurance safeguards are available in order to support you during any such occurrence. That's where Management Liability insurance comes in.
So what is Management Liability insurance?
Management liability is made up of a suite of different insurance covers designed to protect directors and senior managers against risks associated with allegations of mismanagement. Broadly speaking, they fall into three main categories - Employment Practice Liability Insurance, Statutory Liability Insurance and Crime Cover. This piece while giving an overview of Management Liability, specifically looks at what's covered by Employment Practice Liability Insurance.
Who needs Management Liability?
Management Liability insurance is important for all businesses, big and small to help protect against unpredictable and potentially large liability claims.
But I'm just a small business owner, I'm not sure I need it
One of the most common claims we see under Management Liability insurance is for unfair dismissal. Dismissing an employee can be fraught with business risk. This cover may provide financial protection if a wrong decision is made or the incorrect processes followed. Poor or badly executed decisions could lead to unintended consequences. Often they end up being costly and disruptive to your business, as demonstrated by the following case studies.
An employee who is pregnant is dismissed for non-attendance. The manager who dismissed her was not aware of her pregnancy, but things get more complicated when the company fails to reverse this decision when the employee produces confirmation from her GP.
An employee is dismissed after lodging complaints of bullying and aggressive conduct by a work colleague. This could also include complaints made as a result of discrimination on ground of race or disability.
Harassment and discrimination of third parties
A service provider makes allegations of harassment and discrimination against the company. Two employees are named and the company is found to be vicariously liable for the offending conduct.
None of the above examples are terribly unusual and companies who havent anticipated such risks and don't have Management Liability insurance can face serious financial consequences.
To find out more about Management Liability insurance and how it can help your business, call us today on 1300 305 834 and ask to speak to one of our brokers.
Read part two here.
Our advice is general in nature. To read the full General Advice Warning click here