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Opinion: considering management liability cover

Did you know that you or your senior managers could be held personally liable for a mistake or oversight, and that your own assets could be at risk?


Running a company is a big responsibility – and a big liability. Business owners, directors or senior managers are subject to more than 700 federal, state and territory laws holding them personally liable.

Here’s what management liability covers and why understanding how it works is essential for all business owners.

Management liability relates to activities involved with running a company, such as:

  • alleged wrongful acts by managers
  • dishonesty by employees
  • employment practices
  • statutory fines and penalties
  • company tax matters.

Legal claims can be brought by statutory authorities and regulators such as the Australian Securities and Investments Commission (ASIC), or the Australian Prudential Regulation Authority (APRA), your own company or its shareholders, employees, creditors, competitors or, in a worst case scenario, administrators or liquidators.

Even if the claims are groundless, responding to them involves costs, and if a business owner or manager is found liable they can be held personally accountable and their assets garnished, even after their role with the business has ended.


Management liability cover provides protection for a business’s assets as well as those of its managers, ensures continuous cash flow and provides a resource for meeting claims.

It covers businesses and their senior managers against the expenses involved in paying compensation, fines or penalties, legal costs or service fees.

These include:

  • legal representation and advice
  • investigation services
  • civil fines and penalties,
  • damages awarded against you.

Read Roz Shaw’s take on profitability in trucking, here

Businesses can claim under management liability cover for damage control in the form of crisis containment and public relations services, and for your accountant to provide information to respond to a proposed audit by the Australian Tax Office (ATO).

It also recompenses losses due to criminal acts by employees, such as fraud or theft, including stealing stock.


Employment practices. This is an area where claims can be made by past, present and prospective employees relating to bullying, harassment, unfair dismissal or discrimination. Whether or not you choose to defend these in court, they involve unexpected outlays which can be covered by a management liability policy.

Statutory breaches. Businesses must comply with the regulatory frameworks governing their activities across their industry sector, which encompass competition law, environmental and data protection, and employment practice requirements. Inadvertent breaches and oversights can incur penalties.


The bigger your business, the higher the claims tend to be, but when it comes to liability it doesn’t matter if you are a small company or a sole trader: your obligations under law are the same. If you’re a business owner or senior manager the buck stops with you.

As your business grows the scope of your liability increases and just staying abreast with requirements is a huge challenge. And don’t forget that if you are using your personal assets or a loan to back up your business.

Your family’s livelihood as well as yours is at risk.


Not sure of your business’s obligations? Visit the ASIC website or consult a lawyer.

You can also join a business group to share learnings and talk to an insurance broker with specialist understanding of your industry sector for advice about the protection that you need.

Roz Shaw spent 30 years at her family’s transport business before moving into insurance at broker Gallagher


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