Management liability insurance is typically consists of three main components:

Directors and Offices Insurance

A director has a responsibility to act (at all times) in the best interest of the business they’re solely or jointly responsible for. A claim can arise from any accusation that they have not fulfilled their duty and any potential claim, need defending and if necessary, a settlement made. A director’s own liability is unlimited (in the eyes of the law). Directors and officers insurance provides protection for each and every individual directors and senior members of staff who make influential decisions on behalf of a company (and in most cases will cascade down to cover the directors of any subsidiaries too) against defence costs, expenses and settlement for any wrongful acts, such as breaches of duty, misleading statements, negligence, or errors in judgement etc.

Employment Practices Liability (EPL)

This covers claims related to employment practices, such as wrongful discrimination, harassment, and other workplace related issues.

Corporate Liability

Frequently, when making claims against a company director, a lawyer will conduct a two pronged attack and also name the company involved too. This is likely because the company will be seen as having greater assets than the individual, plus it increases their chance of success. It would be prudent to provide your company with the same protection (as directors and officers cover). This covers the legal responsibility of a corporation itself against allegations similar to that to which a directors and officers policy protects but more often than not needs to be taken out as an extension to the D&O policy.

Management liability could ultimately be the difference between your company’s survival or closure.

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