What is management liability insurance?

Management liability insurance covers Company Directors, Managers and Officers against their liabilities arising from the decisions and actions they take within the scope of their duties in running a business. Running a business involves responsibilities that are generic or common to any business such as tax returns, compliance or regulation, Health and Safety compliance etc – although the risks that each business faces resulting from those responsibilities will vary according to the sector they are in. For example if you are running a Care Home you have a specific responsibility to The Care Quality Commission. Whilst every business has responsibility to the Health and safety Executive those businesses in the construction sector have a greater exposure to accidents at work than other sectors.


The different covers under a Management Liability Insurance policy typically are –

  • Directors & officers’ insurance – this protects directors and officers of companies against their personal liabilities following civil, criminal or regulatory actions against their company in relation to decisions and actions which they take. The Companies Act 2006 details statutory duties which a Director must comply with – these give rights to others including shareholders, investors, employees, customers and creditors to take legal action against you if they believe that you have acted negligently or not in the interests of your company.


  • Corporate legal liability insurance – this protects the company itself against defence costs as opposed to the individual Directors


  • Employment practises liability insurance – this is by far the most common type of Management Liability claim and covers your company against defence costs and awards of claims arising, for example, from allegations of sexual harassment or wrongful dismissal by employee


Many policies can also be extended to include Cyber Liability cover or Crime cover although some do have automatic extensions providing limited cover


Why do businesses need management liability insurance?

Because quite simply people make mistakes and are often personally liable for them – Management Liability insurance protects your business against claims arising out of running the business and gives you the support you need to defend those claims. Directors of businesses are busy people and mistakes are made – there are a whole host of responsibilities for Directors to deal with and Directors are accountable to a wide range of matters. Claims can arise from a wide range of circumstances and it is important to remember that a claim does not have to be justified and factual to initiate costly legal defences.

Your company assets/funds will not be able to help you defend claims made against you and it is very unlikely that your standard commercial insurance policy will have any protection for you either.


What type of businesses does management liability cover?

Management Liability policies are designed to cover every business – simply because whether you are the Director of a Construction Company, a haulage Contractors, an Architects etc it really does not matter as those businesses face both common and specific risks which a Management Liability policy can assist you with defending.


Is management liability worth it?

Yes, because it protects you against a financial risk to both you personally and your business. It is an essential cover for any business. You do not have to look far at all to see Directors of businesses being held accountable for all sorts of actions.


BIS can help protect your business

Management Liability insurance can be confusing, but we at BIS Ltd are here to help. But with our broad range of experience, we can assist you in navigating the complexities, and tailor a policy that suits you and your business.


Get more information and discover the wide variety of business insurance policies that we offer by contacting one of our insurance experts today.

Llandudno Office: 01492 555 444
Bangor Office: 01248 665 300
Wrexham Office: 01978 804 200
Manchester Office: 0161 870 1183
Liverpool Office: 0151 203 1145
Lancashire Office: 01257 440 250
e: admin@bisinsurance.co.uk