A large gardening business sued the owners of a small family owned gardening and horticultural company for $445,000 after its retail manager left to join the insured business. The competing company alleged theft of trade secrets and claimed that the retail manager was still in their employment when they began sharing proprietary information with the Insured.
It was determined that the Policy was triggered and indemnity was extended to the Insured. The claim proceeded to hearing and was settled at mediation.
A Managing Director of a medium sized electrical contracting company left to become the CEO of a competing company (the Insured). After 3 months, his previous employer sued him for allegedly stealing trade secrets, confidential business information and employees.
Proceedings were initiated against the Managing Director in the Federal Court for damages. The Insured incurred over $200,000 in legal costs to defend the claim. The parties ultimately settled the dispute for $210,000 with the former Managing Director agreeing to not disclose any confidential information and to not hire former employees.
We are seeing an increase in Management Liability claims for ‘white collar crime’ and in today’s environment, it is to be expected. Whilst we typically know that some employee crimes are covered under a Management Liability, we thought we would recap some of the other covers available under a typical Management Liability Policy:
Protects the Directors and Officers from claims arising from wrongful alleged acts against the Directors and/or Officers. Coverage is afforded to the Insured, but not limited to:
• Personal liability
• Fines and penalties
• Outside directorships including workplace health and safety
• Automatic unlimited run off for retired Directors
• Investigation and pre-investigation costs
Protection for the Company from claims arising from the alleged wrongful acts against the business. Cover includes, but not limited to:
• Environmental violation defence costs
• Defence and fraud
• Work Health & Safety defence costs
• Breach of Contract defence costs
• Tax audit and review costs
• Death or disappearance of named insured director
Employment Practice Liability
• Protects the business from claims for wrongful dismissal or discrimination by past or present employees, customers or suppliers. This includes cover for
allegations made against the insured for discrimination on the basis of sex, race, age, religious beliefs or disability.
• Protecting the company’s balance sheet from fraud and dishonest activities carried out by employees or third parties.
• Protects individuals and the company against fines and pecuniary penalties. This includes defence and investigation costs as well as Enforcement Expenses.
Here is an interesting AFCA Matter Involving Zurich: Hacked business wins $90,500 payout under management liability policy https://www.insurancenews.com.au/daily/hacked-business-wins-90500-payout-under-management-liability-policy