The right insurance cover is imperative to protecting your business, your employees and your livelihood. But with so many insurance types and multiple variations between policies, it can be difficult to know which insurance cover is right for your business.

Two of the less-understood insurance policies available to business owners are Professional Indemnity and Management Liability, or also known respectively as PI and ML insurance. Both can be highly beneficial and prove a valuable investment, however it’s important to fully understand the key differences between them, so you can ensure you purchase the right insurance for your needs.

PI insurance provides cover for a business if, for example, a client was to sue because of bad advice or design provided by the business. ML insurance provides protection for a range of breaches that can occur at management level. Below we will give an overview of each insurance type to help you gain a better understanding of the insurance covers that your business may need.

It is important to remember that with insurance not all policies are made equal; there can be seemingly small differences in covers between policies offered by different insurers that have a much greater impact at the time of a claim. It is a good idea to speak to an insurance broker about the differences in cover between policies available.

Professional Indemnity

Professional Indemnity insurance provides cover for a business against third party loss or damage (including financial loss) – actual or alleged – that has resulted due to the professional advice or service provided by a business. For example, incorrect designs made by an architect or incorrect advice provided by a consultant. Public Liability insurance policies, on the other hand, specifically exclude claims for professional advice or duty.

Management Liability

Management Liability insurance protects businesses for breaches at management level or mismanagement but will often include additional cover such as for financial crimes committed against the business.

The main cover is to protect company directors and officers for breaches of their responsibilities under The Corporations Act.  It can also cover claims made by third parties for loss suffered due to breaches in duty of care owed by management. Again, these claims can be real or alleged.

A Management Liability policy can also cover additional management breaches such as employment practices liability, including unfair dismissal, harassment, bullying in the workplace, statutory liability (including Occupation Health and Safety, fair trading and the privacy act), and crime cover, including theft and fraud by employees.

Both insurance types are important to many SME businesses However, that doesn’t mean your business requires both insurance types. If you have any specific questions, or would like a quotation to protect your business, please call our friendly team today.