5 reasons why your hospitality business needs management liability insurance
The food service business can be fraught with management risks, from unfair dismissal claims by staff to inadvertent pollution through incorrect waste disposal. And kitchens, of course, present their own safety issues to be managed: staff politics, sharp implements and getting those orders out while they’re still hot!
Good restaurant and catering operators know how to get the balance right and keep customers coming back for more – but it helps to have the confidence of knowing you have the right insurance protection.
What a management liability insurance policy covers:
- Crime
- Employment Practices Liability
- Workplace Health & Safety Defence Costs
- Statutory Liability Cover
- Pollution Cover
- Tax Audits
- Public Relations Costs
Management liability insurance covers a wide range of hospitality risks.
Read these five examples to see how this versatile and comprehensive insurance could save your bacon when the unexpected occurs.
Case study 1 – crime
Over three years, an accountant abused access to payroll and the trust account to steal over $100,000 from a restaurant owner but police evidence could only prove theft of $15,000.
Under the restaurant’s management liability insurance, the owner engaged a loss assessor who proved a direct financial loss of $105,000 ‒ which was covered by the policy.
Case study 2 – workplace health and safety
A slip of the knife and an apprentice chef severely cut his hand, leading to the restaurant being prosecuted for failing to provide adequate training and supervision under workplace health and safety regulations.
Management liability insurance covered approximately $20,000 in defence costs.
Case study 3 ‒ tax audit
When notified by the ATO of an impending tax audit of both income and superannuation payment tax records, a hotel restaurant with 250 casual workers realised they were unable to collate the required information.
Fortunately, their management liability insurance provider recommended a specialist forensic accountant to complete the audit and covered $23,050 in fees.
Case study 4 – bullying and harassment
Aggrieved restaurant staff brought serious charges against former directors, managers and supervisors for failing to respond to complaints of bullying, harassment, abuse and sexual harassment.
After litigation, the restaurant’s management liability insurance covered $150,000 in defence costs.
Case study 5 – social engineering
An accounts officer at a large catering business received an email from someone posing as the CEO, requesting a $120,000 transfer to a new supplier. The email was crafted using AI to gather details from public data, making it appear legitimate. Due to the email’s urgency, the staff member bypassed the normal verification process and authorised the transfer. Fortunately, the company’s management liability policy covered the loss as they could demonstrate strong internal controls, even though the process wasn't followed in this instance.
Gallagher is the endorsed insurance broker of Restaurant & Catering Australia. We have developed management liability insurance that’s a great fit for the restaurant and catering sector. Contact us for a quote.
Disclaimer
Gallagher provides insurance and risk management services for clients in response to both known and unknown risk exposures. We have prepared this commentary for general information purposes only and the material is not intended to be, nor should it be interpreted as, legal or client-specific risk management advice. General insurance descriptions contained herein do not include complete insurance policy definitions, terms and/or conditions, and should not be relied on for coverage interpretation. The information in no way reflects or promises to provide insurance coverage outcomes that only insurance carriers' control. You should consider if the insurance is suitable for you and read the Product Disclosure Statement (PDS), Financial Services Guide (FSG) and policy wording before making a decision to acquire insurance. Please ask us for more details before we provide you with our services. Our FSG is available on our website. Insurance brokerage and related services to be provided by Arthur J. Gallagher & Co (Aus) Limited (ABN 34 005 543 920). Australian Financial Services License (AFSL) No. 238312.