You are on the front line and make decisions of great consequence every day. But if push comes to shove and your decision was wrong, you are liable for it. How to protect yourself? With a manager insurance.
As a manager, you make decisions every day – and you can be held liable for them. Lawyer Steffen Rohrig explains how to protect yourself.
Ex-Arcandor boss Thomas Middelhoff did not really have much to laugh about in recent years. The former top manager repeatedly sat in the dock. Among other things, in an embezzlement trial. But Middelhoff was able to relax quite a bit, at least in a threatening situation. He was spared bail – because his manager's insurance took over a liability guarantee. In the amount of 3.4 million euros. Manager Insurance? There is indeed. And for many managers, it is an indispensable part of their everyday working lives. In this euphonious term, marketing experts wrap up the unwieldy verbiage of good old professional indemnity insurance. Why this is not a bad idea for managers, managing directors and board members? So that disputes or liability in the workplace do not turn into a financial disaster.
What can happen to me?
Of course you are no Thomas Middelhoff. But nevertheless, you can still encounter a lot of things from the point of view of labor law. Professional legal protection insurance helps cover financial risks arising from conflicts in the employment relationship. In labor law proceedings, for example, if you take legal action against your employer's dismissal, you pay the legal fees even if you win the case. But there are also considerable risks when it comes to liability, as Steffen Rohrig, a specialist in labor law, knows: "Most legal systems around the world also provide for the personal liability of individuals, even if it appears that only companies have come into contact with one another. In addition, for many reasons, companies often want to shift final liability to individuals. For this reason, executives and corporate bodies must always expect to be claimed against. And because of the high amounts in dispute, the costs are usually very high."
What to consider when choosing insurance?
As a rule, full protection only kicks in after a waiting period of three months with many insurance companies. Neutral comparison portals help with initial orientation, but they are no substitute for an individual comparison for the respective situation. Professional legal protection insurance covers u. a. In the following common disputes:
- paychecks are not paid
- Problems with faulty employer's reference
- unjustified warning
- Dismissal protection suits
- Severance payments
How managers protect themselves when they are sued? Legal expert Steffen Rohrig gives tips.
Expert Steffen Rohrig recommends, "The best and perhaps most expensive insurance won't help if the condition being reported is not covered by the policy. And often, coverage is denied because you haven't brought your policy up to date. In this respect, after any relevant change, the legal protection partner must not only be informed immediately, but the insurance company must also "follow this path". Otherwise, there is a risk of insuring and paying for something that is not (or no longer) needed. And what is needed is then not insured." Legal expenses insurance can generally not be taken out retroactively.
The manager insurance
Executives and managers are often in the front line and are particularly vulnerable for more than just this reason. You make decisions of great importance every day, but as human beings you are naturally not immune to mistakes. In addition, they are liable for their decisions within the company and also bear criminal responsibility for their actions. Managing directors and also executives should therefore take out a specially designed professional legal protection policy. Lawyer Steffen Rohrig advises the following procedure: "First of all, it is advisable to find out whether your company does not also have a special insurance for managers and directors (often called Directors & Officers insurance). If this company-paid insurance is missing entirely or if certain parts such as criminal legal protection, legal protection against financial loss or legal protection against employment contracts are missing, you should also book these special modules separately. As already mentioned: the contract must fit the current activity and if the activity changes, the contract must be adjusted."