The importance of management liability

The number of workers raising issues with unfair dismissals is surging in the wake of shutdowns due to coronavirus. It’s never been more important for businesses to have management liability insurance. April this year saw a 65 per cent increase in cases brought to the national industrial tribunal than the same month in 2019.

As the owner and operator of a small business, a lot of responsibilities are on your shoulders. Not only do you have employees, suppliers and clients relying on the success of your business, but you may also be held personally liable for allegations of mismanagement, wrongful dismissal, employee fraud, non-compliance with workplace health and safety (WH&S) requirements, and even the costs of a tax audit.

Why is management liability insurance important?

Management liability insurance is your best protection against mismanagement allegations made against you as the owner and operator of your small business. Importantly, it will help keep your personal assets safe from any claims against you.

Without management liability insurance in place, any claims of mismanagement successfully upheld against you could not only cost you your business, but also put your personal assets under threat.

What does management liability insurance cover?

While management liability policies differ slightly between insurance providers, they generally cover the legal costs associated with defending yourself against allegations of mismanagement of your company, harassment, wrongful dismissal and fraud.

The four areas usually covered by management liability insurance are:

  • Directors and Officers Liability – Cover for loss in respect of any claim for an error, act, omission or negligence committed by your Directors & Officers
  • Employment Practices Liability – Cover for employment related wrongful act
  • Statutory Liability – Cover for formal or official investigations by regulatory, governmental or authorised institutions
  • Company Liability – Cover for loss to the company for claims due to an error, act, omission or negligence by the company

What are the most common types of claims?

Again, depending on the specifics of your management liability policy, you may be protected against losses from claims associated with actual or alleged mismanagement of the company whilst performing your duties for the business.

A management liability policy may also protect you against the costs associated with employee allegations of bullying and harassment, unfair and wrongful dismissal, and discrimination.

Many management liability policies also provide financial protection against employee theft, fines and penalties related to OHS, defamation allegations, and costs associated with regulator investigations and tax audits.

How is management liability cover different to professional indemnity?

It’s important not to confuse management liability cover with professional indemnity insurance – they are two different types of insurance and play different roles.

Management liability essentially covers you against allegations of mismanagement, while professional indemnity insurance covers against damages arising from professional services or advice you have provided.

Think of it like this: professional indemnity insurance covers the services and advice provided by your company, while management liability insurance covers you in running your business.

I’m a straight shooter. Why do I need management liability cover?

The vast majority of small business owners and directors run their companies with the noblest of intentions and would never knowingly engage in fraud, harassment, discrimination or any other dishonest management practices.

However, even an allegation of mismanagement could come with a heavy legal defence bill – and unfortunately your innocence doesn’t necessarily excuse you from those costs. It’s possible that in the instance of court proceedings a judge could order your false accuser to cover your legal costs, but that’s far from guaranteed – and may not apply to matters that don’t make it into a court of law. In reality, the best protection is a good management liability insurance policy.

Tips for Working from Home

I usually work from home but not everyone does so I thought I would share some tips for all those working under different conditions which they are used to.

1. As you don’t have to travel to get to work, set the alarm for you usual time and go for a walk. A walk is great for your mental and physical health and as you will be greatly reducing your steps during the day you will need to get some sort of exercise. Your dog will also love you for it.

2. Always dress like you are going to get into the car and go to work. DO NOT think that it is a green light for trackies and moccasins. You will not have the same frame of mind if not dressed properly with proper shoes on, make up done, shaved in all the appropriate places etc.

3. Have a separate area set out for your office. It can be in the “formal dining area” which, as we know is hardly ever used, or the spare room. Even an end of the family room can be used as long as you aren’t in the same room as the kids watching TV, as that will never work out well.

4. Have your proper breakfast before you start work so you won’t think of snacking all morning and always take the usual breaks such as morning tea and lunch time.

5. Don’t think that you can do your housework, hang out washing, clean the floors etc, it is a work day. If you usually work 9am to 5pm or 10am to 4pm then that is when you are at work. Not half and half because that doesn’t work. This may be difficult with young children at home but just work it the same way as you normally would on school holidays. School age kids will have school work to do and you have work to do.

6. This will be a difficult time for businesses, some more than other, so if you feel your business is getting out of control, speak to a business specialist such as Simon Bowden and have some coaching sessions.

7. Marketing plans can work really well with most of the population at home. As you know, you need to have your name out there as you can be the best business in the world but if no one knows about you, you can go out of business quickly. Ask a specialist like Zoe Langenberg from Be Social Media about keeping ahead of your Social Media Marketing and your name in front of the public.

8. With government small business incentives coming up there may be reasons for discussing your accounting needs such as additional items to be claimed at tax time since you are working from home. If you don’t have an accountant and usually just do your own tax it might be time to get one. Matt Kajewski from RJ Sanderson & Associates might be able to help.

9. Buy local. Make sure you are supporting the local small business just like you like to be supported. Go to the bakery, the green grocer the butcher, anyone that is still open. And, of course contact your local insurance broker for quotes!!

10. There are a lot of ways to reduce spending. You will be saving on petrol for a start, not buying lunches or coffee. Get rid of additional television networks, you won’t need them, there is no sport being played anyway and lifestyle programs are on free to air. Contact your bank to discuss mortgage payments or your real estate agent to see if you can reduce your rental payments.Do keep in mind though that a lot of landlords have mortgages on their rentals, they aren’t all rich and can do without the rent being paid.

11. Simple things like not eating meat every night will save money as vegetable dishes such as mushroom risotto, tomato & basil pasta or a frittata with salad are cheaper than meat dishes. Spend a bit of time planning dinners, it may take your mind off your worries for a short time. You will have more time to cook anyway if you don’t have to commute home from work.

12. If you own a business, join an business group such as BNI who are conducting meetings online at the moment. These groups are full of business owners going through the same things as you are.

Lastly, don’t think you are in this alone. Get your online community happening so you have each other for support.

We are all in it together.

Secure your home this summer.

Going away for summer holidays?
Don’t let your home look empty. Ask neighbours to collect items from your letterbox, make sure the lawn is mowed. Remember to ensure your home is secure. Deadlocks do make a difference. If burglars have to break a window to get in and can’t get out through a door because it is deadlocked, there will be a limit to how much they can take out through the broken window.
It wouldn’t be a good end to your holiday to come back to a ransacked home.

Business Interruption Insurance is vital for cash flow following a claim.

If you insure your business building, contents or stock, you may want to consider including the Business Interruption section. Having a claim paid on the property section for fire or water damage for instance, at your premises, can interrupt your business for a few weeks or even months while the repairs are being carried out. Your cash flow can reduce or even stop. How will you pay yourself, your staff and suppliers? If you need to move premises you will need money to set up. This section can help with cash flow even if you aren’t working to capacity for 12 months or more. Want more information? Give us a call on 03 9763 9553

Business Owners need insurance

Everyone with a business needs insurance. Brett Morris from  https://www.crossroadmedia.com.au/  is a commercial photographer so whether he is going to a Deb Ball taking photos of dressed up teenagers, a client’s factory for product photos to use in a catalogue or other images for marketing and sales there is a Liability Risk. There is also a risk to his tools of trade which, in Brett’s case, are his camera’s, tripods, video cameras, lenses etc. If he were to have these items damaged in a car accident on the way to an job or stolen it would be very expensive to all of a sudden have to purchase new equipment. Liability and Tools insurance can be packaged together in a cost effective way to ensure you don’t come across unexpected expenses during the year. If you have a business and tools of your trade, please give me a call or send a message so I can tailor an insurance policy for your needs.

 Disclosure. Information supplied on this website is not comprehensive and does not take into account any individual's needs or requirements. It provides only a summary of the subject matter covered and is not tailored specifically to your business or private situation. You should make your own assessment of any information contained as to rely on it wholly at your own risk