Due to the current pandemic, claims against directors are on the rise. Disgruntled employees aren’t happy with the high number of redundancies being made, or about being forced back into work while the pandemic is on-going, on the basis that they do not feel safe. For this reason, it is important that you, as an employer, protect yourself and your company from any claims made against you. You can do this by making sure you have a suitable management liability policy in place.
What is a Management Liability Policy?
Business and charity insurances are in place to help protect you as a company, to cover your responsibilities as an employer, products/services you sell, members of the public, and your actions as a business or charity. Management liability focuses on the last of these, covering the actions you take.
Management liability covers the entire entity of the business, as well as key individuals within it. This includes issues arising from decisions and/or mistakes that have been made, including wrongful activities. These areas are incredibly complex, as such, the legislation surrounding them are very specific. For this reason, management liability is split into three different levels of cover. The first is directors and officers insurance, the second is employment practices liability and the third is corporate legal liability. To understand management liability, let’s look at each of these three areas in more detail.
Directors and Officers Insurance covers individuals
Business owners, directors and members of senior management are required to make decisions and in doing so, they could make errors that could lead to legal action being taken. This legal action can be taken against any individual business owner/director/senior management, holding them personally responsible for any errors or omissions. Directors and officers insurance protects these individuals from any penalties/fines, and any large compensation or defence costs, on the basis that this doesn’t relate to any intentional breaches, like fraud claims.
Corporate Legal Liability covers the company
If an employee of the business makes an error or does something to prompt legal action, then corporate legal liability will cover the company. It also covers the business for other violations, such as trespassing and things like water contamination.
Employment Practices Liability covers the employee
The legislation surrounding employment law is incredibly complex and detailed, which is why employment practices liability is so important. This insurance covers the company in the event of an employee seeking legal action for unfair dismissal, discrimination, sexual harassment and numerous other employment issues. Sadly, claims of unfair dismissal are very common and can lead to large costs for the company, which is why this insurance is incredibly important.
To protect yourself and your business from legal action, we strongly recommend you make sure you have a good management liability policy in place.
If you’d like to know more or have any questions about how management liability can help to protect you and your business, call the specialists at Falcon Insurance now.