What is management liability and why do I need it to protect my business and employees?

Cambridge Cleantech is starting a new section called “How to…”, consisting of actionable insights to improve your cleantech business. This month, Alan Bosewell will cover management liability and why you need it to protect your business and employees.

It doesn’t matter whether you’re the director of a start-up, non-profit or FTSE100 listed firm, the day-to-day decisions you make, could leave you vulnerable to legal action. Not only that, your employees and even the business itself, are also subject to scrutiny and claims can also be made against them. However, you can protect your actions and those of your staff and organisation with management liability insurance, here’s what it covers and how it can help your business

What is management liability insurance?

Management liability policies combine three different, but complementary types of insurance solutions. Each one protects a particular aspect of your business against claims of wrongdoing (or alleged wrongdoing) for any decisions made from the day-to-day running of your business and covers the associated legal costs and any damages paid.


The three elements of management liability insurance are:

Each of these three products is as important as the others. This is because if a claim is made, it’s often not just made against one element. For example, a claim can be made against a director and the business.

Why do businesses need management liability insurance?


The bottom line is that a claim can be made against you, your staff and your business at any time, and they can come from a number of sources. For instance, stakeholders, employees, regulatory bodies, competitors and also customers. Whether that claim is ultimately successful or not, you’ll still face costly legal fees.

As a director, it’s also crucial to remember that your personal liability is unlimited and if someone makes a claim specifically against you, your own assets are at risk if you don’t have adequate directors liability insurance.

Management liability insurance could also cover costs while investigations take place into the origins of a claim. This can help minimise long-term reputational damage, enabling you to get your business back on track.