Management liability insurance

Management liability (for early stage businesses) protects startup founders and directors for claims that they personally made mistakes or omissions while in the role.

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Why management liability insurance?

Founder liability

Starting a business is always risky. But you might not realise that as a founder, you could personally face liability claims if something goes wrong. For example, if an investor claims you’ve misused funds, you could face legal action, fines, disqualification, or even a prison sentence. If that happens, management liability cover (sometimes called directors and officers or company director insurance) would cover any defence and compensation costs.

Worldwide cover

Aiming for world domination? Expanding abroad is much easier in the digital world, but you need insurance that’s as mobile as you are. Whether you’re working with international investors, or setting up a base overseas, our management liability cover will travel with you. So, wherever you are, we’ve got your back.

Specialist cover

Traditional ML policies don’t cover many of the risks that you face as a startup founder, including insolvency and claims made by large shareholders (>15%). You’ll also find that professional indemnity insurance and general liability policies are unlikely to cover claims against you personally. Our specialist ML policy is designed for startups, guaranteeing personal protection for those with management responsibility in the business.

Management liability insurance guide

What is management liability insurance?

Starting a business takes superhuman energy and ambition. Investors, co-founders, employees, regulators – they’re all counting on you. You need to tread a fine line between taking calculated risks, and also acting responsibly. And if something doesn’t pan out as you planned, as a founder – and director - you could face a claim for personal liability.

This is where management liability insurance – sometimes called Directors & Officers insurance, or D&O for short – is your savior. It covers your personal liability for any mistakes or omissions while a company director, including any defence costs and awards made against you. With Digital Risks, this also includes claims made by investors who own more than 15% of the business, as well as claims regarding insolvency.

Who is management liability cover for?

Any startup business whose founders and directors have legal or regulatory responsibilities to investors, employees, regulators or the public, should consider ML.

For many founders, the most important time to take out this cover is when seeking funding. Not only will investors expect you to have it, but it will provide valuable protection if you face disputes or claims in the future.

What are the risks of not having management liability insurance?

As a founder or director, you can face a whole variety of claims, including misuse of investment funds, breaching health and safety laws, and causing insolvency through malpractice. This is most likely if it’s claimed that you acted outside the knowledge or authority of other board members.

The fallout from claims like this can be significant, including personal liability for any fines, compensation and defence costs, not to mention any criminal investigations, which could lead to disqualification, or even a prison sentence. Not something you want to face alone.

Things you can do

Of course, your best defence is to avoid any claims to begin with, by doing your homework and taking all the right precautions.

As a director, make sure you’re up to speed with all the laws and regulations that affect you and your business. When securing investment, ensure you do your due diligence on the individuals or funds in question, and go through the paperwork with a fine-tooth comb.

If you don't personally have the time or expertise to do this, then hire an expert who does – it will help to avoid any misunderstandings or disputes in the long-run.

What to watch out for

Management liability insurance is specifically built for individual directors and officers, so it won’t cover the business itself. Consequently, you’re also likely to need public liability insurance and professional indemnity insurance for this purpose.

When thinking about who in the business to cover, be aware that management liability insurance can protect anybody with management or supervisory responsibilities – not just the CEO or founders. So it might make sense to cover the whole management team, rather than just one or two key people.

Other covers to consider

Professional indemnity

Covers your liability to customers for professional mistakes, errors or omissions in services you provide.

Public liability

Covers your liability to members of the public for bodily injury or damage to their property.

Employers liability

Covers your liability to employees for bodily injury or work-related sickness.

Cyber security

Covers your liability for failing to protect data, as well as penalties for not complying with data protection law.

Contents and equipment

Protects your property against theft, loss or damage.

Commercial legal protection

Covers compensation awards, professional fees and legal costs associated with a range of legal disputes.

We're rated excellent by our customers

Excellent value at an affordable monthly cost. I have not needed use the services. But its good to know I have the insurance there to allow me to get on with my work.

James, J. Black Photography

Flexible. simple, easy, immediate. As a busy freelancer I need flexibility to potentially change the policy month by month - very handy and a feature I didn't find with other providers.

Tim, Graphic Design Freelancer

Excellent service, and really lovely people. Completely understanding of small or start up businesses, and a willingness/ability to be flexible. I'm very happy.

Lorna, Magic Penny Gifts

A super slick interface and all around great experience. Thumbs up Digital Risks! Having spoken to a number of "large" insurers, the pricing I received from Digital Risks was much more competitively priced for "like for like" cover. Highly recommended.

Jonathan, Frello

How we work

Fast and tailored experience

Arrange your business insurance in minutes. Get a quote and set up your cover online. Our web app will make your experience as quick and seamless as possible and help you to make an informed choice about the cover you need.

Flexible, subscription-style policies

Our monthly subscription model gives you ultimate flexibility, with the ability to change or cancel your cover at any time, and without any fees. Meaning you’re more accurately covered and only pay for what you need, when you need it.

Cutting-edge products

Our superior tech enables us to deliver bespoke products that equip your business for all types of risks. Unlike other online insurance providers, our technology places risks individually so we can offer lower premiums for more comprehensive cover.

Exceptional customer service

Our experienced and knowledgeable team will look after you personally if you need support. We have a 24-hour claims helpline and aim to settle most small claims within 24-hours of receiving the necessary information.

Management liability insurance FAQs

What is management liability insurance and what does it cover?

Many directors don’t realise but if anything goes wrong on your watch, you could be held personally liable for the fallout. That means legal action, fines, disqualification, or even a prison sentence. Management liability cover – sometimes called directors' and officers' or D&O – is designed for this purpose, covering any defence costs and awards made against you.

Is it mandatory to take out management liability insurance?

This insurance is not a legal requirement, but it can help to think of it be described as professional indemnity cover for people in managerial positions. It’s a common misconception that personal liability claims would be covered under a professional indemnity (PI) or general liability policy. But this is unlikely to be the case. A separate management liability policy is the only way to guarantee personal protection for those with management responsibility in your business.

What is not covered by management liability insurance?

A management liability policy covers you personally against any professional mistakes that you personally make. Personal liability claims can cover a whole range of issues, from breaching health and safety laws, to mis-administration of the company pension, or errors in financial reporting.

It does not however cover anyone else in your business from claims against them (you need professional Indemnity insurance for these claims). Nor does it protect your business from claims regarding an injury caused on your premises to your employees (employers liability insurance) or members of the public (public liability insurance)

Who do you provide cover for?

Management liability insurance is not only suitable for company directors, but also for all people in supervisory positions, effectively anybody who has legal or regulatory responsibilities to employees, the public, regulators, investors or other directors. It’s especially important for people in charge of publicly listed companies and those looking for funding, as most investors will look favourably upon founders who take their responsibilities, and the risks they face, seriously.

What if I’m in charge of several businesses?

No matter how many companies you’re involved in, you’ll be covered for your activities within all of them, as long as you provide this information at the moment of taking out your policy. And if your responsibilities increase at a later date this is easy to change with our pay-by-the-month subscription. Just give us a call and we can update your policy and advise you on any changes to the cost.

What if I don’t hold a considerable share in the company?

It doesn’t matter how big or small a share you hold in a company. If you have management responsibilities, particularly if they’re of a legal or regulatory nature, then you should consider management liability insurance.

What if I don’t hold a considerable share in the company?

It doesn’t matter how big or small a share you hold in a company. If you have management responsibilities, particularly if they’re of a legal or regulatory nature, then you should consider D&O.

What happens if I sell my shares?

Selling your shares in a company may or may not affect the level of D&O cover you need. However, whenever your role or position changes, you should always let us know to ensure your policy is up-to-date.

How much do I need and how much will it cost me?

Both the level and the cost of D&O cover that you need will depend on several factors, such as your company’s (or companies’) activities, its financial stability, how long it’s been operating as well as where it is located. You can find out for sure by getting in touch with us and talking over the details.

How can I pay for my cover?

At Digital Risks, we don’t like to put constraints on anyone, especially our customers. All of our policies are sold as flexible pay-monthly subscriptions, helping you to manage your cash flow, and giving you the freedom to change or cancel your cover at any time.

How do I get an invoice?

Invoices for your monthly payments are available on request, so all you need to do is give us a call (or drop us a line), and we’ll get the requested documents sent out to you as quickly as possible. Alternatively, we can set up your account so that you automatically receive these on a monthly basis.

How can I make changes to my management liability policy or make a claim?

Our monthly subscription model gives you ultimate flexibility, with the option to cancel or change your cover at any time. We know that small businesses can grow and change quite frequently, which is why we’ve made it incredibly easy to amend your policy. Just get in touch with us by phone, email or webchat in the bottom right corner of this page.

Same goes for making a claim.We won’t burden you with loads of unnecessary process and paperwork. All you need to do is let us know what happened and we’ll sort everything out for you as soon as possible.

What kind of claims does management liability cover?

When you’re in charge, you have to make difficult decisions on a daily basis, frequently under intense pressure. While you’ll no doubt do your utmost to ensure you’re acting in the best interests of the company, and its employees and stakeholders, at all times, occasionally you might make the wrong move - or others might claim you have. If that happens, you could personally face legal claims, fines, disqualification, or even a prison sentence.

  1. You have to be really careful about what you say and how you behave at work, particularly when you’re the one in charge. Sometimes, things slip out that you don’t mean, or in the heat of the moment, and you could find yourself with discrimination or harassment claims to deal with. If that happens, D&O will help you defend yourself, covering any legal or settlement costs that might result.

  2. As a company director, chances are you handle a lot of business relationships personally, especially if you’re a small business. However if you decide to move on to a different company and take your contacts with you, your previous employer could take you to court. In this situation, your legal costs and any resulting compensation will be picked up by your D&O policy.

  3. Staying up-to-date with ever-changing rules and regulations isn’t easy, but it’s vital if you want to stay on the right side of the law. In many cases, any regulatory issues or claims would fall on the company as a whole, however if you personally are found at fault, an individual claim could be made against you for malpractice. And once again, D&O would have your back. Though it might be your mishap, you can rely on this cover to have your back.

What else do I need?

As management liability is specifically designed for people in charge, you’ll also need to take out policies that protect your business as a whole. For example, you’re legally required to take out employers liability insurance, which protects you against any claims of accident, illness of injury from employees. And with Digital Risks, EL comes as a package deal with both Public and Product Liability cover, which will protect you from claims of accident or injury from members of the public, as a result of your activities or products.

Another important cover to consider is professional indemnity insurance, which protects your business in the event of a claim for professional oversight or malpractice. It’s like D&O but for your company as a whole.

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