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Management Liability Insurance

When your employees, investors, or regulators come after you personally

You’re a director or manager. Someone claims you made a bad decision that cost the company money, or worse, harmed employees or shareholders.

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What could go wrong

(and why you need this)

Management Liability protects you personally when corporate lawsuits target your decisions, not just the company.

Scenario 1

The wrongful termination claim

You’re a co-founder with eight staff members. You had to let someone go due to poor performance. They claim unfair dismissal, workplace bullying, and discrimination.

They’re suing the company and you personally for $150,000*. Your lawyer says it’ll cost $40,000* to defend even if you win.

What Management Liability covers

Your legal defence costs, investigation expenses, settlement payments if you’re found liable, and your personal legal representation separate from the company.

Scenario 2

The investor lawsuit

You raised capital from investors. The business didn’t hit projections. An investor claims that you misrepresented the financials during fundraising and wants their $200,000* back, plus damages.

They’re suing you as a director, not just the company.

What Management Liability covers

Directors & Officers (D&O) liability defence costs, settlement payments, and legal representation to protect your personal assets.

Scenario 3

The regulatory investigation

The ACCC or ASIC investigates your company for potential breaches of competition law or corporate governance. You’re called to testify.

Legal costs to prepare and represent you: $60,000*. The investigation takes 8 months.

What Management Liability covers

Your legal costs during regulatory investigations, costs to comply with investigation requests, defence costs if charges are laid, and representation fees.

Scenario 4

The data breach fines

Your company suffers a data breach. The Office of the Australian Information Commissioner (OAIC) investigates and fines the company $500,000*.

Then they come after you personally as the director responsible for data governance. Personal fine: $50,000*.

What Management Liability covers

Defence costs during OAIC investigation, legal representation, regulatory fines (where insurable by law), and crisis management support.

What this actually covers

Management Liability

Management Liability is actually a bundle of several coverages protecting directors, officers, and the company:

Directors & Officers (D&O) Liability:

  • Personal protection when you’re sued as a director or officer
  • Legal defence costs
  • Settlement and judgment payments
  • Wrongful acts in your management capacity
  • Investigations by regulators (ASIC, ACCC, OAIC)

Employment Practices Liability (EPL):

  • Wrongful termination or dismissal claims
  • Discrimination claims (age, gender, race, disability)
  • Workplace harassment or bullying allegations
  • Breach of employment contract claims
  • Retaliation claims from whistleblowers

Corporate Legal Liability:

  • Defence costs for corporate regulatory breaches
  • Fines and penalties (where insurable)
  • Statutory liability for unintentional breaches
  • Legal costs to defend corporate prosecutions

Crime/Fidelity:

  • Employee theft or fraud
  • Embezzlement by staff
  • Forgery and financial crime
  • Computer fraud

Tax Audit Cover (often included):

  • Professional costs for ATO audits
  • Accountant and lawyer fees during tax investigations
  • GST, PAYG, and FBT audit defence

What's typically not covered

  • Deliberate fraud or dishonesty
  • Personal profit or advantage gained illegally
  • Fines for criminal acts
  • Bodily injury or property damage (that’s other policies)
  • Claims that occurred before you bought the policy

When you need this

By founder stage

Start smart

Pre-launch to first year

You need this when:

  • You incorporate as a company (you become a director with legal duties)
  • You take on external investors (they can sue if things go wrong)
  • You hire your first employee (employment practices liability starts)
  • You’re appointed a director of any company (even if it’s just yours)

Who needs it:

  • Company directors (you, co-founders)
  • Senior managers and executives
  • Companies with employees (EPL cover)
  • Startups raising capital from investors

Typical coverage

$1-2 million for startups with 1-10 employees.

Scale strong

Growing and hiring

Your cover needs to increase when:

  • You raise significant capital (Series A+) and have investor board seats
  • You’re hiring managers and creating an executive team
  • Your revenue exceeds $2M (higher exposure to claims)
  • You’re handling sensitive employee or customer data
  • You’re expanding into regulated industries

Typical coverage

$2-5 million for growing businesses with 10-50 employees.

Stay protected

Established and optimising

Review your cover if:

  • You’re considering an exit or acquisition (representation and warranty claims)
  • You’ve had employment disputes or complaints
  • You’re under regulatory scrutiny or investigation
  • You’ve appointed independent directors or advisers
  • Your industry has seen high-profile management liability claims

Typical coverage

This is where things get custom, and you need to talk to the team at Pocket to evaluate your specific needs.

Common questions

Founders actually ask

I'm a sole director, why do I need this?

As a director, you have legal duties under the Corporations Act.

If you breach those duties (even unintentionally), you can be personally liable. ASIC can prosecute directors, creditors can sue, and employees can claim against you personally.

Management Liability protects your personal assets.