Management Liability Protection

Against a backdrop of difficult economic conditions in an increasingly litigious society, there has never been a greater need for UK companies and their directors to have suitable protection from legal actions brought against them.

With many employers being forced to downsize over the last year, leading UK Insurer Hiscox has experienced a sharp rise in claims on its policies made by redundant employees for unfair dismissal or discrimination. With alternative employment hard to come by, more ex-employees are taking the legal route to resolve their issues, perhaps taking the view that they have nothing to lose by taking their former employers to tribunal.

Increased protection for employees in the shape of recent regulation has further increased the risk of experiencing legal action, even for the smallest employer.  These regulations include the Corporate Manslaughter Act, greater maternity and paternity rights and laws forbidding discrimination on the grounds of age, religion or sexual orientation. 

Many companies are not aware of their vicarious liability for the actions of their employees; an 'off the cuff' remark made by an employee, even in apparent jest, can lead to a company facing expensive legal action, potentially paying a six figure award if its defence is unsuccessful.

Is Your Company Protected?

Standard Directors and Officers' insurance will cover individual directors and officers against many forms of action. However, this may no longer be sufficient to protect companies against new and changing laws. 

Some policies will respond only when the insurer believes they have a high chance of winning the case. This means that at the very time you need it most, the cover may not be available, leading to costly and unforeseen expenses.

Policy wordings are now available that will offer you protection even if the employee's case is strong. Management Liability Insurance products offer comprehensive protection for UK companies and business owners, including cover to protect against actions from employees and regulators, plus many other areas of potential legal action including shareholder disputes, taxation claims, pollution claims and breach of data protection rules.

Please contact your local Cherrypicked Insurance Broker to discuss your current cover and options available.

Last reviewed 01/10

 

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