Thank you for sharing your details with us!

What is Management Liability Insurance?

A Management Liability Insurance (also known as Directors & Officers Insurance) is a type of policy that is there to protect your company and its managers, directors and officers from any financial losses due to claims arising from their mistakes or actions.

For example, it can help to protect your business, and the directors and managers, from financial losses that might arise out of any claims of discrimination, harassment, fraud, or wrongful termination brought against these individuals in their capacity as directors and officers while managing or running business operations. 

In such situations as these, a Management Liability Insurance provides an extra level of coverage against all kinds of unpredictable and potentially large liability claims, as well as covering some of the losses due to a lawsuit.

Why do you need a Management Liability Insurance?

Management liability insurance is there to help businesses of all sizes, big and small, protect against unpredictable and potentially large liability claims due to mistakes or actions like harassment and fraud from the company or its directors and officers. But why do you really need it?

You and your business will be protected against vulnerabilities to shareholders and their claims
Your business will not face losses in case of discrimination or sexual harassment allegations or other employment practice violations. 
It can cover the cost of regulatory investigations, defending and settling claims, as well as paying any compensation your business is liable for.
By getting the policy, you will be complying with corporate governance requirements and other legal statutes.
This policy is specially designed for the risks and financial exposures that come with managing a company.

What will a Management Liability Insurance Cover?

When you get a management liability insurance, your business will be protected in case of....

Legal Representation Costs

Legal Representation Costs

Your business will be protected in case of legal liability for payment of defense costs, and legal fees and expenses, if an employee, client, or other third party files a case against you.

Retired Directors and Officers

Retired Directors and Officers

In case claims are made against former or retired directors and officers of your company, arising during their tenure, we’ll help cover the costs.

Public Relations Expenses

Public Relations Expenses

In case you need the help of a public relations consultant to prevent the effects of negative publicity, we’ll help with the cost of that too.

Emergency Costs Advancement

Emergency Costs Advancement

In case you incur claim expenses or representation costs before receiving written consent from us, we’ll give you give retrospective approval for these amounts.

Company Insurance for Employment Claims

Employment Practice Liability (EPL)

Covers you in case of defense costs and damages arising from employment-related claims such as allegations of wrongful termination, discrimination, and workplace harassment. This coverage is also sometimes called Employment Practice Liability (EPL).

Kidnap Response Cost

Kidnap Response Cost

In the unfortunate case that an insured individual is the victim of kidnapping, we will take care of the costs incurred by this situation.

Counselling Services

Counselling Services

This covers the cost of fees and expenses to a psychiatrist, psychologist or counsellor for the insured individuals to treat stress, anxiety or such similar medical conditions due to a claim or inquiry compelling attendance.

Shareholder Claims Expenses

Shareholder Claims Expenses

We will cover you and your company in case you are required to pay any fees, costs, charges and legal expenses to a shareholder of the company who is pursuing a claim against you.

Management Buyouts

Management Buyouts

In case a subsidiary is no longer a part of your company, we will continue the existing coverage from the date of the buy-out until the expiry of the policy.

Pollution Claims Expenses

Pollution Claims Expenses

This covers any legal and defense costs that may be incurred while defending a claim of any actual or alleged discharge, dispersal, or leaks of pollutants.

New Subsidiaries

New Subsidiaries

If your company acquires or creates a new Subsidiary then they will also be covered under this policy starting from the date of acquisition or creation, subject to certain terms and conditions.

What is not Covered?

Since we at Digit believe in transparency, here are some cases where you won’t be covered.

Any criminal, fraudulent, dishonest or malicious acts and resulting fines and penalties.

Deliberate acts of violating a contract, law or regulation.

Known wrongful acts that existed prior to policy inception.

Losses due to war, terrorism and nuclear perils.

Any infringement or misappropriation of patents or trade secrets.

Employer's Liability in case of bodily injury or disablement to an employee as a result of performing their jobs. 

Fines, penalties, and claims for seepage or pollution as well as costs for clean-up, containment, etc.

How much does Management Liability Insurance cost?

How much your Management Liability Insurance premium will cost will be is based on a number of factors, like:

  • The nature and type of your business and the industry in which it operates

  • How many managers, directors and officers are a part of the company

  • The number of employees

  • The size of your company 

  • Where your business is located

  • The past claims made against your business 

  • The company’s estimated revenue and/or profit 

  •  The total number of assets 

  • The limit of liability that you opt for

Other factors that might affect the insurance premium are the age of the company, its financial stability, its trading patterns, and shareholders. 

Which Businesses need a Management Liability Insurance?

If your business could need protection from internal or external claims against managers, directors and officers, you might benefit from getting this insurance. Management liability insurance is important for businesses of all sizes, whether they are big or small to protect against potentially large liability claims. However, please note that some businesses might not be eligible for a Management Liability Insurance, such as companies that do not have a registered office in India, political organizations, and more. 

Start-ups

All kinds of start-ups from IT companies to consulting firms.

Small and medium sized businesses

This includes businesses with up to 500 employees.

Large businesses, corporations, multi-national firms, and more

These might include companies with over 1000 employees.

How to choose the right Management Liability Insurance?

  • Complete Coverage – Make sure that you look for a management liability insurance policy that gives you maximum coverage for things like defense costs, settlements, judgments, and other costs.
  • Pick the right Limit of Liability – Try to pick an insurance policy that lets you customize your limit of liability, or sum insured, based on the nature and size of your business 
  • A Simple Claims Process – Look for an insurance company where claims are not only easy to make but easy to settle too as it can save you and your business a lot of hassle.
  • Extra Service benefits – Lots of insurers offer many other benefits, such as 24X7 customer assistance, easy-to-use mobile apps, and more.
  • Compare different policies – It may be great to find ways to save money, but sometimes a policy with the lowest premium might not be the best option, as it might not give you the right coverage. So compare the features and premiums of different policies to find one that works best for you. 

Common Management Liability Insurance Terms Simplified for You

Director

This is any person in a management or supervisory position in the company, including members of the supervisory board, management board, or board of commissioners.

Bodily Injury

This refers to any physical injury, sickness or disease including resulting in death, humiliation, mental anguish, mental injury, or shock.

Employment Wrongful Act

Cases of failure to comply with employment policies or procedures, including wrongful termination, harassment, discrimination, wrongful failure to employ or promote, etc.

Third Party

A third-party is any person (or entity) who is not the insured party (i.e., you) and the insurer. It also excludes any other person who has any financial interest in your business or who you contract with.

Limit of Liability

This is the maximum amount your insurer will be able to cover for you in case you make a claim. It is similar to a sum insured amount. 

Deductible

In case of a management liability insurance, you will have to pay a small amount out of your pocket before the insurer pays out your claim.

Property Damage

Physical damage to, destruction of, or loss of tangible property as well as the loss of value or use to the property.

Inquiry

This refers to any official investigation or inquiry in relation to the business or activities of the Company or the conduct of an Insured that are not otherwise routine procedures.

Pollutant

Pollutants are any substance that is an irritant, toxic, hazardous, or contaminates an area. It includes lead, smoke, mold, byproducts, fumes, chemicals, waste materials, and more.

FAQs about Management Liability Insurance in India