Managing a business is about more than operations and growth. As a company director, officer, or owner, you’re personally exposed to a wide range of legal and financial risks. That’s where management liability insurance plays a vital role.
This cover is designed to protect the company and its leadership team from claims resulting from decisions made in the course of running the business — including alleged breaches of duty, workplace misconduct, and regulatory violations.
Whether you’re a sole director or managing a team across multiple locations, management liability coverage offers peace of mind and financial protection if the unexpected happens.
Why Management Liability Insurance is Crucial for SMEs
In today’s litigious environment, even small to medium businesses face major exposure. A simple breach of workplace law, a disgruntled employee, or an ASIC investigation could quickly escalate into a costly legal matter.
Unlike public liability or professional indemnity insurance, which cover damage, financial loss or injury caused to others, management liability insurance focuses on internal governance risks. It includes both company reimbursement and personal protection for those in leadership roles.
Without proper protection, a claim could severely affect your business’s cash flow or even place personal assets at risk.
What’s Covered Under Management Liability Insurance?
Management liability insurance is a comprehensive insurance package made up of several components — each designed to cover a specific legal risk that directors and businesses face. Here’s a detailed breakdown of what’s typically included:
Directors and Officers Liability (D&O)
What it covers:
Protection for directors, officers, and senior managers if they are held personally liable for actual or alleged wrongful acts in managing the company.
Examples of claims:
- Breach of duty or trust
- Misleading statements to investors
- Negligence in financial reporting
- Failure to comply with statutory obligations
Why it matters:
Personal assets like your home or savings could be on the line without this cover.
Company Reimbursement
What it covers:
Reimburses the business when it indemnifies directors or officers following a covered claim.
Why it matters:
Helps businesses recover costs related to defending or settling claims made against their leadership team.
Employment Practices Liability (EPL)
What it covers:
Legal costs and compensation linked to employment-related claims such as:
- Unfair dismissal
- Bullying or harassment
- Breach of employment contract
- Discrimination
Important note: The policy wording may differ in which penalties are covered, depending on jurisdiction.
Crime or Fidelity Cover
What it covers:
Protection against internal dishonesty or fraud committed by employees or contractors. This may include:
- Theft of company funds
- Invoice fraud
- Cyber-enabled internal theft
Why it matters:
Employee dishonesty is a leading source of business loss in Australia.
Superannuation Trustee Liability (optional)
What it covers:
For businesses operating a staff super fund, this section covers trustees against breaches of trustee duties.
Claim Made Policies: What You Need to Know
Management liability insurance is typically written on a “claims made” basis. This means:
- It covers claims first made and notified during the current policy period.
- You must notify your insurer as soon as you’re aware of circumstances that could lead to a claim.
Tip: If you change insurers, ensure continuous cover is maintained. Some policies offer run-off cover for retiring directors or winding-up businesses.
Legal Risk Management: Be Proactive
Having insurance is essential, but you should also manage risk at the source. Here are a few steps Australian business owners can take:
- Ensure policy wording reflects your company’s legal exposures
- Keep board minutes and financial records up to date
- Provide regular training for managers on WHS, Fair Work, and discrimination laws
- Review HR policies and procedures
- Partner with a trusted insurance broker such as Atlantic Insurance
Who Needs Management Liability Insurance?
Management liability isn’t just for large corporations. In fact, private companies, startups, and family-run businesses may be at higher risk due to limited legal resources and less formal governance structures.
Ideal for:
- Pty Ltd companies
- Businesses with employees
- Directors or officers involved in strategic or financial decisions
- Any business where legal claims can arise from managerial decisions
If you’re unsure whether your business is protected, our team at Atlantic Insurance can help assess your specific needs and recommend the right cover.
What’s Not Covered? Understanding Exclusions
Typical exclusions may include:
- Fraud or dishonesty known to the insured
- Intentional acts or criminal conduct
- Prior known claims or circumstances
- Bodily injury or property damage (covered under public liability)
Always read the conditions and exclusions section of your policy or speak to your broker for tailored advice.
Why Choose Atlantic Insurance?
Our experienced Client Managers provide more than just quotes — we deliver:
- Tailored insurance solutions for Australian businesses
- Guidance through complex policy wordings
- Help managing claims made during the policy period
- Ongoing support as your business grows or changes
We work with a wide panel of insurers and ensure your policy meets the needs of your industry, structure, and growth stage.
Get a Quote for Management Liability Insurance
Avoid leaving yourself or your business exposed to legal risks. Management liability insurance can help protect your personal reputation, your company’s balance sheet, and your future growth.
Any information contained on this page of the website is general advice only and has been prepared without taking into account your objectives, financial situation or needs. You should consider these, having regard to the appropriateness of this advice and the relevant Product Disclosure Statement (‘PDS’), Target Market Determination (‘TMD’) and Financial Services Guide (‘FSG’), which will be provided following any formal recommendation to you.