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Management Liability Insurance Explained
Management Liability is the Liability Risk that Management of an organization faces and which can arise from different sources and be caused by different loss scenarios. Management Liability can be insured through Management Liability Insurance, also known as D&O Insurance. It is important to note that Management Liability can be a product of frivolous action against Management. Nevertheless, frivolous actions entail investigative and defence costs that are incurred, which translates into a financial loss and hence a form of Management Liability.
Management Liability Cover
Also known as D&O Liability Insurance, the insurance provides protection to Management in case their organization does not indemnify them for a Management Liability loss. The insurance can also reimburse the insured organization for any indemnifications provided to Management in the event of a Management Liability loss. In addition, the insurance can also protect the organization itself in case it is subject to liability as a legal entity as a result of a Management Act, the latter being a defined term within the Management Liability Cover. Management or Insured Person should also be a defined term and the definitions are different from one insurance policy to another. Many insurance policies include employees who are not managers within the scope of the definitions. As such, Management Liability Cover can technically protect all employees of an organization as well as the organization itself in the event of liability caused by a Management Act.
Note that Management Liability Cover is different from one insurer to another, and it is important to reword any policy independently of any broker or insurer in order to effectively cover the risks that are relevant to Management as well as boost the payout ratio of the insurance, all while reducing net cost.
Management Liability Insurance Coverage
What Does Management Liability cover? Management Liability insurance coverage extends to investigative costs, defence costs, and other forms of expenses incurred or that can assist in defending a claim, in addition to the three main insuring agreements or coverages outlined in the above section titled Management Liability Cover. The three main insuring agreements outlined within Management Liability Insurance Coverage are also known as Sides A, B, and C. Side A being coverage for management in the event they are not indemnified by their organization. Side B being coverage for reimbursement to the organization that is indemnifying its management. Side C being coverage for the organization itself.
Management Liability Claims
Management can be subject to lawsuits from:
· Shareholders --> ex. Management makes a strategic decision that leads to a drop in share price of the organization and as a result shareholders sue Management for losses they sustain;
· Suppliers --> ex. Management gets sued by a supplier that hasn’t been paid its invoices
· Customers --> ex. Management gets sued through a class action lawsuit on behalf of a group of customers who sustained injury after using a product sold to them
· Others including but not limited to regulators, industry bodies, etc.
Management Liability Brokers
There is no shortage of management liability insurance brokers ranging from global brokerages such as Marsh, Aon, Willis, etc. to regional brokerages to local brokerages. Contact us if you are looking to buy or renew Management Liability Insurance as we make brokers compete against each other to reduce commissions and yield a product tailored to your needs and goals.
FAQ
Management Liability vs Professional Indemnity
Technically speaking Management Liability is a form of Professional Liability, however one that strictly relates to the actions taken by Management in their capacity as such. Whereas Professional Indemnity includes different types of actions, aside from those taken by Management in their capacity as such, most notably actions that underpin professional services provided to customers.
Management Liability Insurance Meaning
Please see the above section titled What Is Management Liability Insurance Coverage.
Management Liability Insurance Cost
Cost of Management Liability Insurance differs depending on the type of organization (public, private, not for profit), the industry it operates in, its size and scope, amongst other factors. The cost of management liability insurance is lowest for the smallest not for profit organizations where premium can be well under $1,000 per $1 million of Management Liability Cover. Large publicly traded banks will pay millions of dollars a year in premium for limits that exceed $150 million in Management Liability Cover.
Is Management Liability The Same As Directors And Officers Insurance
Yes, Management Liability is the same as Directors and Officers Insurance.
Management Liability Insurance Quote
Contact us if you are looking to buy or renew Management Liability Insurance. Our team guarantees your net cost in addition to rewording the insurance to fit your needs independently of any broker or insurer. We negotiate extensively with insurance brokers to get you the best Management Liability Insurance Quote.
Management Liability vs D&O
It is the same thing, just named differently.