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Whether you run a small local business or a large corporation, the reality is you can be made personally liable for an accident, injury, or breach of law that occurs within your company, be it an alleged or actual occurrence. Australia is a highly regulated country, and while that brings with it many benefits in terms of levels of superior safety standards, service excellence, and high levels of compliance, it also means managing a company comes with serious responsibilities. 

Management Liability insurance is a safeguard for the managers, directors, and other employees within your company should their actions be made personally liable in a claim against the business. While many of the claims made are related to fraud and employee practices, there is an increase in penalties being handed down in relation to Workplace Health and Safety laws (WHS).

 

What is management liability insurance?

Management liability insurance is a protective barrier for your business in the event you are made responsible for injury or damage to a person or their property. In general, this form of insurance is optional, but it can be the difference between success and bankruptcy. In certain industries such as consultancies, independent contractors, retail, restaurants, and real estate agencies, certain forms of liability insurance are required before work can commence. 

As opposed to personal liability insurance, which provides protection for third party damage or loss should a client decide to sue, management liability insurance safeguards management levels within a company for breaches of responsibility. While the cover depends on the policy in place, typically multiple key areas are covered; employment practices liability, directors and trustees, liability, privacy and cyber liability, tax audits, government fines, and private capital raisings.

 

Do I need management liability insurance?

Should you face unexpected liability costs from a Management Liability insurance claim, you are at risk of losing personal assets, like your home and other property, as well as business capital. While you may think this will never happen to you, it is a serious risk to take. 

In order to shield your business and personal assets, it’s important to acquire a management liability insurance quote from experts in the field, like Connect Business Insurance. By analysing your unique requirements, complete coverage can be put in place, assisting with the costs of defence against a claim.

 

The cost of a claim

In the past, the focus of management liability claims has largely been on employee practices, such as bullying or unfair dismissals. Successful fraud claims have also made up a large monetary portion of cases covered by management liability claims, which have grown in amount every year.

This is looking to change, with an increased focus from the Australian Government on breaches of workplace safety laws, finding management liable for accidents and injuries that occur at work. Workers compensation insurance alone is not adequate to cover a company in the case of a work-related injury, illness, or death.

Breaches of WHS laws within uninsured companies bring a huge cost, both direct and indirect. Workers compensation premiums can be accompanied by hefty legal penalties from the Government, and this leads to reduced productivity, less output, loss of earnings, and unhappy workers. 

A worst-case scenario

Perth company Charman Australia PTY Ltd learnt the downfalls of not having management liability insurance the hard way this year. In a case that portrayed the seriousness of the Australian Government in handing down serious fines for breaches of workplace safety laws, they were fined nearly half a million dollars after an employee was injured at work.

The incident in question was serious – a plumber fell through the roof from a height at the new Perth museum, causing damaging injuries with long-term effects. After pleading guilty to failing to maintain a safe workplace, by not having a fall injury prevention system in place, a $450,000 fine was issued.

While no one deliberately sets out to harm their employees, the company’s failure to properly follow WHS laws by not installing a fall prevention system resulted in serious injuries. As the company did not have management liability insurance to assist with their defence, the responsibility of that accident fell to the directors to pay.

 

Workplace safety laws

The average cost to employers within Australia for work-related illness and injury is over $1.6 billion a year. Penalties handed down to companies and their management team, or directors, specifically for breaches of WHS laws have grown in monetary value over recent years in WA, with Mark McGowan stating it reflects “the seriousness of ensuring the safety of Western Australian workers”.

The work health and safety (WHS) regulator in WA is the WorkSafe Commissioner, who enforces the Occupational Safety and Health Act of 1984, also known as the OSH Act. The regulations within this act lay out clearly the guidelines to be followed by each company, regardless of industry, to ensure the safety of their employees, owners, and members of the public. 

Implementing safe practices, including equipment and protocols, as per WHS rules, is key to your success, and failure to do so can have dire consequences including fines, prosecution, loss of staff, severe loss of earnings, and even jail time.

While each industry brings its own unique health and safety risks, the main industries subject to serious accidents and injuries are construction, manufacturing, transport, warehousing, agriculture, forestry, and fishing. This makes acquiring a custom management liability insurance quote from a reliable provider an important step for these sectors, should management require defence against a WHS claim.

 

Complete coverage with Connect Business Insurance

With extensive experience providing quality coverage to Western Australian business of all shapes and sizes, Connect Business Insurance are perfectly primed to advise on the right Management Liability Insurance for you and your company. 

Not all insurance policies are created equal, making it important to get each detail right should an unexpected liability be brought against you. For more information on Public Liability Insurance, Workers Compensation policies, or to get a custom Management Liability Insurance quote, don’t hesitate to get in touch today on 1300 477 662, or via contact@connectbi.com.au.

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