Run a company, and the company's mistakes can become yours personally.

You will hear both names used in the same conversation, and quotes often swap one for the other. The practical difference is who is being protected. D&O responds to a claim made against you as an individual, so it is your own assets it stands in front of. The other sections of a management liability policy respond mainly to claims against the business, though employment practices and statutory liability claims can also name a director personally.

Most small and mid-sized Australian companies are exposed on both sides, which is why the cover is commonly sold as one policy rather than two. Standalone D&O policies exist too, and they are generally a larger company's purchase - listed companies, heavily regulated businesses and companies at that scale - because insurers generally write D&O on its own once a business has outgrown what a management liability policy is built for.

Directors and officers cover (D&O) protects your personal assets, your house, your savings, your super, if you are sued over a decision you made as a director. Running the company through a family trust or a Pty Ltd structure does not build a wall around you personally. If a creditor alleges the company traded while insolvent (a breach of a director's duty under section 588G of the Corporations Act), or a shareholder or liquidator pursues a director over a decision that went wrong, this is the cover that pays the legal defence costs and, subject to the policy's terms, conditions and limits, any damages you are found to owe personally.

Employment practices liability covers claims from staff, including staff you have already let go. Applications to the Fair Work Commission, most commonly unfair dismissal, rose sharply in the 2024-25 financial year, and unfair dismissal claims alone now make up more than a third of everything the Commission deals with (Fair Work Commission Annual Report 2024-25).

It is not only the company that can be named: under section 550 of the Fair Work Act, a director can be held personally liable as an accessory to the company's own underpayment or other Fair Work Act breaches, which is exactly the kind of personal claim this section of the policy exists to answer. A dismissal that felt completely fair to you can still cost tens of thousands of dollars to defend, even when you win.

Statutory liability cover pays the legal cost of defending a prosecution or investigation by a regulator such as WorkSafe, the Fair Work Ombudsman or the ATO. It is worth being precise about what this actually buys, because the law changed: across most of Australia it is now illegal for an insurer to pay, or for a business or director to be indemnified for, a WHS monetary penalty itself.

That ban is aimed at the penalty itself and does not reach the cost of defending one, which is very often the larger number, and what your own policy pays towards that defence comes down to its wording. Six of Australia's eight work health and safety regimes now ban insurance for WHS fines: New South Wales, Victoria, Queensland, Western Australia, South Australia and the ACT.

In each of those, any part of a policy that promises to pay a WHS penalty is void by statute for policies written since those laws started, and in each it is a criminal offence for the insurer to pay it and for the business to accept it. Several also make directors and officers personally liable. Only Tasmania and the Northern Territory have no law of this kind, and even there the position is unsettled rather than clear. The answer for each state and territory is set out under the common questions below.

Crime cover protects the business against loss from theft, fraud or embezzlement by your own employees. It is a section business owners often skip, usually because they trust the person it would protect them from.

In the policies we place, all four of these sections come as standard. Where clients actually get caught is the sub-limits: the statutory liability and crime sections often carry their own lower limits sitting inside the policy's headline limit, and those two are the ones worth checking before a claim tests them.

Management liability itself is usually a standalone policy, bought and renewed on its own, separate from a general business insurance pack. On the business packs we place, only a couple of the insurers on our panel build it in as a section of the wider pack; everywhere else, it has to be arranged in its own right. Knowing which is which, and whether that distinction actually matters for a particular business, is exactly the kind of placement decision a broker makes that an online form never gets to.

One close relative sits on its own page rather than inside this one. Cyber liability, covering data breaches and cyber attacks, lives at Cyber Insurance, because insurers price and underwrite that risk separately from everything above. Tax audit cover does not get its own page, because it usually does not need one: it is commonly already sitting inside the very policy described above, or inside a wider business pack, as a bundled amount or a small selectable section.

Tax audit cover, folded in

If the ATO, or a state revenue office (in Queensland, most often the Queensland Revenue Office reviewing payroll tax on contractor arrangements) opens a review, tax audit cover pays the professional fees, your accountant's, tax agent's or BAS agent's bill, for responding to it. It does not pay the tax itself, or any penalty, fine or interest you are found to owe; it only ever pays the cost of defending your position.

You can run the cleanest books in the country and still be selected for a review: the ATO's data matching does not check whether you are honest, it checks whether the numbers line up, and any mismatch, however innocent, gets a letter. The one rule that decides whether it works at all: cover has to be in force before the audit notice arrives.

Once a letter has landed, that specific review is already excluded from any new policy. Some tax audit cover also extends to an audit of a self-managed super fund alongside the business itself, though this is a small, specialised corner most businesses will never need to weigh up.

The first mistake is believing your company structure protects you personally. A Pty Ltd or a trust puts a wall between the business's debts and your own pocket. It does nothing to stop a regulator, a former employee or a liquidator naming you as a director in your own right. If you signed on as a director, you can be sued as one, personal assets and all.

The second mistake is about timing, and it is the one almost nobody sees coming. Management liability is written on a claims-made basis, which means the policy that responds is the one in force when the claim is made, not the one in force when the conduct actually happened. Most claims surface long after the event: an employee terminated two years ago lodges a claim now, a decision made three renewals back gets investigated today.

Your policy's retroactive date decides how far back it still reaches. Switch insurer to save money and get handed a policy with the retroactive date reset to the day it started, and everything before that date can fall into a gap nobody notices until the claim arrives asking for it. The full claims-made and retroactive-date explainer lives on Professional Indemnity Insurance; what matters here is the switching trap.

Both mistakes look the same at claim time: a business owner who thought they were covered, discovering they were not, at the exact moment they can least afford it.

An online quote engine asks what industry you are in and how many staff you have, then gives you a price.

Those questions get asked either way, once by an insurer working out whether to pay a claim. The difference is whether they get answered properly before you buy, with someone who understands what the insurer is really asking, or after a claim, when a rushed or incomplete answer becomes the insurer's reason to dispute it.

At renewal, wherever a policy does not carry an unlimited retroactive date, we check your retroactive date against your previous policy before we recommend switching insurer, so a cheaper premium never quietly reopens a gap in your cover. We also tell you plainly which sections you are getting as standard and which are optional extras, because a management liability policy that drops crime cover to save a few hundred dollars is not the same product as one that includes it.

We disclose our commission and our broker fee on every invoice, to every client, and have since we started in 2010. You always know exactly what we are paid to arrange your cover, which is not something every broker in this market will show you.

You are the target market for management liability if any of the following is true: you employ staff, even one; you have made someone redundant or let someone go in the last two years; you hold a director role in a Pty Ltd, whether or not you draw a wage from it; you sit on a not-for-profit or association committee; or your business answers to a regulator that can investigate or prosecute you personally, such as WorkSafe, the ATO or an industry licensing body.

This cover is available at modest limits and premiums for genuinely small companies, right where directors assume it would not be worth having. It is built for proprietary limited companies, from a sole director with one employee up to a much larger board.

The businesses that go without this cover are almost never the ones who thought it through and decided the risk did not apply to them. They are the ones who assumed, without ever checking, that this was a big-company problem.

Assuming a WHS fine can be insured. In most of Australia it cannot, not any more.

The ban covers the whole of a WHS monetary penalty, not just small ones, which is why Queensland's industrial manslaughter penalty could never be insured there.

Letting the crime section lapse because "we trust our staff". Trust is not a control. Crime cover exists precisely because the person best placed to take money from a business is someone the owner trusted enough to give them access to it.

Treating public liability or professional indemnity as if they already cover director and employment claims. They do not. Public liability responds when someone is physically hurt or their property is damaged. Professional indemnity responds to advice you gave a client. Neither one answers a former employee's unfair dismissal claim or a creditor's allegation that the company traded while insolvent.

Buying on price alone at renewal without checking the retroactive date. Covered in detail above, and worth repeating here because it is the single most common way management liability quietly stops working.

Assuming an insolvency exclusion kills any claim connected to a failed company. Most management liability policies exclude claims arising from insolvent trading, and it is tempting to assume that rules out any claim that touches a company that later collapses. Courts read these exclusions narrowly. In a 2019 Full Federal Court decision, AIG Australia Ltd v Kaboko Mining Ltd [2019] FCAFC 96, the court held that an insolvency exclusion only applies where the claim itself is founded on an allegation that the company was insolvent, not merely because the company happened to be insolvent by the time the claim was made. A decision unrelated to insolvency can still be covered, even if the business fails afterwards.

Assuming a sole-director company is too small to be sued personally. A sole director of a one-person Pty Ltd carries exactly the same personal exposure as a board member of a much larger company. Size changes the premium. It does not change the law. In our experience the director most at risk of a claim is the one running a one-director company, and almost never because they did something reckless. They know how to run their business, and it is rare for anyone to be taught what the law asks of the person who signed on as its director. Ask yourself honestly: have you had time to study the thousands of pages of the Corporations Act to know and understand your responsibilities? That question, not company size, is what this cover answers.

Letting a claims-made policy lapse with nowhere for old conduct to go. Selling the business, closing it down, or a director retiring does not make past decisions disappear, and a policy that simply lapses leaves nothing to answer a claim about conduct from while it was in force. An extended reporting period, sometimes called a run-off or discovery period, keeps that window open after the policy ends, and it is a distinct trap from the retroactive-date mistake above: that one is about how far back a live policy still reaches, this one is about what happens once there is no live policy at all. It can only be arranged before the policy lapses, never after.