As the name implies, management liability insurance protects a company’s executives and managers from certain forms of litigation, specifically those that pertain to insolvent trading, fraud, discrimination, employee theft, and the like. However, it also has the more important role of preventing the company from suffering excessive financial losses, especially if it is forced to pay for restitution, statutory fines, and penalties. At the very least, this insurance policy can provide indemnity for defence costs and associated costs in the claims processes.
Things can become a bit more complicated when cyber-crimes are involved, though. While scams and online theft are traditional examples of cyber-crime, the Australian Federal Police also use the term to describe any crime committed with the use of technology. This means that selling business secrets online may also be considered a cyber-crime, which is something that a management liability insurance policy can’t protect against.