In this practice area
Disputes under management liability packages covering directors and officers, the entity, employment practices, statutory liability, crime and tax audit sections.
What management liability cover is
Management liability insurance is a package policy commonly bought by private companies and small to medium businesses. It bundles several covers into one wording: directors and officers liability, company or entity liability, employment practices liability, statutory liability, crime, and often tax audit and workplace health and safety sections. Each section has its own insuring clause, limit and exclusions, and they interact.
Disputes arise when a claim straddles sections, such as an unfair dismissal claim that also triggers a regulator's investigation, or when the insurer says a claim falls into a section with a lower sublimit. Other common disputes involve whether a fine or penalty is insurable, whether a matter is a claim, late notification, and non-disclosure at renewal.
The legal framework
The Insurance Contracts Act 1984 (Cth) applies to the whole package, including section 13 on utmost good faith, section 54 on post-contract acts and omissions, and the claims-made protections in section 40(3). Statutory liability sections are limited by what the law allows to be insured. In NSW, section 272A of the Work Health and Safety Act 2011 (NSW), inserted in 2022, makes it an offence to enter into or provide insurance that covers liability for a WHS monetary penalty. Other regulatory regimes and public policy may also limit cover for fines and penalties.
Employment practices claims may arise under the Fair Work Act 2009 (Cth), anti-discrimination legislation or contract, and are brought in the Fair Work Commission, the Federal Court or the Federal Circuit and Family Court. Whether back pay, compensation or costs are covered loss is a frequent point of contest.
How these matters run
Management liability claims often begin small: a demand letter, a Fair Work application, a regulator's notice. The first question is which section the matter falls under and whether it has been notified correctly. Getting that right at the start avoids later arguments about late notification or wrong allocation.
Because the policy is a package, the aggregate limit and any sublimits are shared, and a large claim under one section can reduce what is available for another. Insureds should know where they stand on limits before committing to a defence strategy.
How GopherWood Lawyers acts
We read the package as a whole, identify every section that could respond, and argue for the section and limit that best fits the claim. We notify properly, deal with the insurer on consent and defence costs, and challenge declinatures based on exclusions or non-disclosure.
We also advise on the underlying employment, regulatory or commercial claim, which lets the coverage and defence strategy align.