Do I really need Management Liability Insurance?

Management Liability Insurance protects company directors, senior managers, and officers if a claim for a wrongful act is brought against them or their company.

Here are some examples of what the Management Liability Insurance policy would cover 

Breach of contract  

A contract of employment is a legally binding agreement between you and your employee. A breach of that contract happens when either you or your employee breaks one of the terms, for example you are unable to pay wages, or your employee does not work their agreed hours.  

It is sometimes the case that not all the terms of a contract are written down. A breach may be of a verbally agreed term, a written term, or an ‘implied’ term of a contract. 

Charges of corporate manslaughter 

The Corporate Manslaughter Act puts company executives in the firing line for breaches of health and safety, so it’s wise to get some protection 

For example, a property developer or construction firm could face a criminal prosecution under the Corporate Manslaughter Act. With many construction sites still found to be failing safety checks by the Health and Safety Executive, directors need to be sure they are taking all possible steps to minimise the risks and acquire adequate financial protection to mount a defence case. 

Claims of sexual harassment  

Sadly, sexual harassment in the workplace and society is still an issue. 

Because incidents of sexual harassment occur everywhere, including the workplace, employers have a duty of care that is owed to their employees to protect them from sexual harassment. In response to this fiduciary responsibility, employers must make efforts to protect their staff. Prevention is clearly the best strategy as it ideally would eliminate sexual harassment in the workplace occurring at all.  

But sometimes bad things still happen and the actions of an individual within a workplace can create significant financial risk for an employer. 

Breach of health and safety regulations  

A conviction for a safety-related breach can have an immense impact on your business and the individuals within it. It is a criminal offence to breach the obligations contained within health and safety legislation. If a safety breach within a workplace causes a death, then those responsible may also face prosecution for gross negligence manslaughter (in the case of individuals) or corporate manslaughter (where the defendant is a business). 

Safety Legislation Claims  

The policy will indemnify a Director or the company for any Safety Legislation Claims from a Directors/Officers wrongful act or the company’s wrongful act, this will also include defence costs.  

• A Safety Legislation Claim is a court action alleging a breach of statutory duty under health and safety, consumer protection or food safety legislation.   
• The policy will indemnify Safety Legislation Claims and defence costs that insurers are legally allowed to pay on your behalf. 

Tax Cover 

The MLP policy could assist, If you become insolvent, the policy will indemnify you for allegations of a wrongful act in connection with your unpaid tax liabilities.  

Compensation for Court Attendance Cover 

The MLP policy will indemnify you or the company at the rate of £250 per day for each Director and Officer and any accompanying husband, wife, civil or unmarried partner provided such Director and Officer’s attendance is needed in court in connection with any claim or official investigation. 

Management Buy-Out

Were members of an existing management team to conduct a buyout, the MLP Policy would continue to maintain cover at the existing levels for a period of 30 days from the buy-out for any wrongful act carried out by an Insured Person during this period.

Personal Charity/Not for Profit Association

Cover can be provided by the MLP Policy in respect of any claims made alleging a wrongful act carried out by an Insured Person in their personal capacity as a Director or Officer of a charity or not for profit organisation.

Pension/Employee Benefit Schemes

Cover will be provided in respect of claims arising from the administration of pension or employee benefit schemes of trust funds.

Corporate Legal Liability Breach of Data Protection

The MLP will provide indemnity for a claim made relating to an Insured’s breach of Data Protection law.

Corporate Legal Liability Identity Fraud cover

Unfortunately, incidents of identity theft and fraud remain an ongoing concern. The MLP will indemnity a company for a claim resulting from Identity Fraud.

Also, the company could face a fine for a H&S breach. Fines for the most serious safety breaches are now routinely in the hundreds of thousands of pounds. Coupled with the need to pay not only your own legal costs but also the prosecutions,’ non-compliance with health and safety law is a costly exercise. 

Now ask yourself again: “Do I really need Management Liability Insurance?”

If your answer is YES, and if you want to find out more, email us at info@custodianinsurance.co.uk or give us a call on 03333 448 535.

Or simply leave us your contact details in the form below.