Why Management Liability Matters: Real Claims
Business owners may find themselves asking, do we really need Management Liability? But the reality is that even the best-run businesses can face lawsuits, regulatory fines, or employee misconduct. Unfortunately, no matter how strong a company's work culture or operations may be, the likelihood of an incident remains uncertain.
[Read: Why every business needs Management Liability Insurance]
Management Liability protects business owners and executives from the financial and reputational risks associated with these unforeseen incidents. Legal disputes, regulatory investigations, and employee claims can be costly, time-consuming, and damaging to a company's stability. Without adequate coverage, the financial burden of defending against claims-whether valid or not-can be overwhelming. Investing in Management Liability ensures that business leaders have the support they need to navigate these challenges while maintaining focus on growth and success.
Real-Life Examples of Management Liability Claims
To better understand the impact of Management Liability, let's look at real-life cases where businesses faced unexpected legal and financial challenges. These examples highlight how easily companies can become entangled in costly disputes, and how Management Liability was used to support the business during unexpected and complex matters.
[Read: Understanding Liability Insurance]
CASE STUDY 1: Sexual Harassment
A marketing agency faced a sexual harassment claim after a senior employee was accused of inappropriate behaviour. The case was escalated to the Fair Work Commission, requiring legal defense, internal investigations, and a costly settlement.
The outcome: The insured was able to claim under the employment practices liability (EPL) section of the policy, covering the costs of legal fees, settlement, and compliance and training costs, totalling $380,000.
CASE STUDY 2: Patent Infringement
An entrepreneur launched a new product, designed as a supermarket alternative to a well-known branded item. However, the original manufacturer, who owned the patent for the design, sued for patent infringement, claiming the new product was a copy of their design.
The outcome: The entrepreneur's Management Liability insurance covered legal defense costs, including court fees and lawyer expenses, as well as the settlement amount required to resolve the patent dispute, covering a total of $175,000.
CASE STUDY 3: Employee Embezzlement
Over the course of a year, an employee at a wholesale meat supplier used their access to the company's financial systems to void sales invoices and embezzle funds. The employee transferred a total of $85,000 into their personal bank account.
The outcome: The insured was able to claim under the crime section of the policy for investigation costs, any legal fees, as well as reimbursement of the stolen funds. The claim payment was $150,000.
CASE STUDY 4: Tax Audit
A technology company was subjected to an ATO audit for its tax returns for the last 3 years. The insured purchased a tax audit extension, as well as involved their accountant to assist with the audit, costing the business $40,000.
The outcome: The insured made a claim under the tax audit section of their management Liability policy and was able to be reimbursed for the expenses involved in responding to the audit.
CASE STUDY 5: Unfair Dismissal
An employee of solar power company lodged an 'unfair dismissal' complaint with the Fair Work Commission. He alleged that his dismissal was because he had raised a workplace issue. The former employee sought compensation for both financial and non-financial losses due to his termination.
The outcome: The insured was able to claim under the EPL section of their policy to cover settlement and legal defense costs associated with the matter, totalling $65,000.
If any of these situations arose in your business, how would your company handle it? Would you have the financial and legal resources to navigate a costly dispute or unexpected claim? Without the right protection in place, these challenges could put significant strain on your business. Management Liability ensures that when the unexpected happens, you have the support and coverage needed to safeguard your company's future.
[Read: Management Liability Insurance - what you should know]
How Coverforce can help
Navigating the complex world of business risks requires the right protection, and that's where Coverforce can help. Our expert brokers work with you to understand your business's unique needs, ensuring you secure the right Management Liability policy tailored to your risk appetite, budget, and operational requirements. Whether you're a small business or a larger operation, we work with leading insurers to secure tailored protection that helps safeguard your directors, officers, and business assets from unexpected liabilities.
Get in touch today to discuss the right Management Liability solution for your business.
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