01625 919470

  • Macclesfield, United Kingdom
  • 01625 919470

Management Liability

Management Liability Insurance

Management Liability insurance – sometimes called Directors and Officers (D&O) – protects the personal assets of corporate directors and officers, and their spouses, in the event they are personally sued by employees, vendors, competitors, investors, customers, or other parties, for actual or alleged wrongful acts in managing a company. Management Liability insurance policies offer liability cover for company directors and managers to protect them from claims which may arise from the decisions and actions taken within the scope of their regular duties.

With an increasing trend for regulators and stakeholders to hold directors and officers personally responsible when problems arise, their personal assets are at stake. And while the liability of a company is limited, a director’s liability is unlimited. That’s why Management Liability cover is so important in today’s business world when it comes to attracting and retaining key people.

The reality is that decision makers often make mistakes and can become personally legally liable for them. They constantly walk a fine line making tough and complex decisions with huge implications.

It includes cover for defence costs and expenses, investigation costs and extradition costs. Considering that even simple investigations can cost thousands, if not hundreds of thousands of pounds, purchasing directors & officers insurance makes pure financial sense.

Companies purchase Management Liability cover because managers can make mistakes. Management Liability  coverage includes financial protection for managers against the consequences of actual or alleged “wrongful acts”. Policies cover the personal liability of company directors but also the reimbursement of the insured company in case it has paid the claim of a third party on behalf of its managers in order to protect them.

It’s riskier than ever at the top

The directors and managers in your company are in a position of responsibility. Managers, directors and supervisors can face allegations and claims for which they may be personally liable. Even in a company with limited liability status, personal liability is unlimited.

Directors and managers are under increasing scrutiny, and it is commonplace for allegations of wrongful acts to be made. Any allegations of wrong-doing need to be investigated and defended, and this can cost a significant amount even if the case doesn’t reach court. This means directors and officers personal finances are at risk. So it’s essential that companies provide protection with Management Liability insurance.

Why is this so important for businesses to have in place?

  • Litigation is easy to access and increasingly employees know their employment rights and seek to sue individuals rather than the company self when things go wrong.
  • Legal liability is shifting away from companies towards personal liability. Corporate manslaughter is an example of where personal accountability is pursued in both criminal and civil settings. Proceedings often being served upon the company and individuals.
  • Regulated industries are particularly susceptible to claims. Enforcement and supervisory bodies are becoming increasingly proactive in investigating companies and individuals within them.

The cost of defending an allegation can be enormous, and without the cover, you will be left to cover the costs (and any subsequent damages or awards) personally.


  • Cover your legal defence costs and possible settlements in the event of a regulatory or company investigation
  • Providing Management Liability for executives can reassure existing management and potential new candidates
  • Protects a corporation’s directors and managers when the company cannot indemnify the individuals
  • Reimburses the organization when it indemnifies the individuals, thus protecting the company’s balance sheet

Frequently Asked Questions

Management Liability insurance can protect directors and managers of a business from all kinds of personal liability problems. These can range from claims brought by unhappy customers, through to official investigations. It is increasingly common for claims to be made from disgruntled shareholders and investors who hold directors and management of a company responsible for losses via negligent running of the company. Claims and proceedings which involve personal liability might typically include:

  • Claims brought by shareholders and investors if a company goes into liquidation or a dramatic reduction in valuation
  • Actions brought by liquidators when there is suspicion of wrongful trading
  • Actions brought by HMRC if they suspect miscalculated taxation payments

Although the definition of a director is fairly clear, the definition of an officer can be more vague. It’s important to realise that, in these litigious times, claims or proceedings could be issued against pretty much any employee working in a managerial or supervisory post.

It depends on the kind of policy you’re buying. There are a lot of details and add-ons that can be included, depending on your business type and complexity. That said though, there are a few things Management Liability insurance does not cover. This includes breach of contract, fraud, criminal activity, dishonest conduct, punitive damages, intentional wrongdoings, that are normally covered under other business insurance. Before buying your policy, it’s advisable to have a good knowledge of what it won’t cover and PHP Insurance are on hand to advise on these matters.

It is so much more likely in recent years that an individual or individuals of a company will be sued. People are much more knowledgeable about the process and high profile cases are published all over the internet and social media. If someone sues the directors and officers in your company, the cost of legal fees and other charges can pile up to be extremely high. It could get higher if you incorporate settlement and compensation in that mix should you lose the case or settle out of court. Affording such expenses is not viable for SMEs and in some instances, larger corporates. This is why having Management Liability insurance is so important. It can be the financial cushioning for your directors and managers in case if someone decides to take legal action against the mentioned individuals. There are other reasons why Management Liability insurance is important. For example, if you’re looking for investors in your company, these investors would perhaps become a part of your board of directors. Most of them would want your company to have Management Liability insurance that mitigates their personal liabilities in their role. So, in a way, your decision to buy this insurance can be a factor for prospective investors in your company.