--- title: "One claim can sink a business. Here’s how brokers can keep clients afloat." description: "One claim can sink a business. See how Hutch Management Liability helps brokers protect SME clients from director liability, fraud, and EPL risks. " type: blog version: 1 version_id: "eac0b5de-46ca-445c-9673-3a5d5590cb03" generated_at: "2026-06-09T00:20:14.149Z" author: "Alec Bouchard" date_published: "2025-11-11T23:31:04.000Z" date_modified: "2025-11-12T02:07:20.047Z" language: en reading_time: "7 min" word_count: 1264 keywords: ["Keeping it simple for brokers", "Why it matters for brokers", "Reports & Real World Examples"] url: "https://hutchunderwriting.com.au/blog/director-liability-insurance-claims" --- # One claim can sink a business. Here’s how brokers can keep clients afloat. > One claim can sink a business. See how Hutch Management Liability helps brokers protect SME clients from director liability, fraud, and EPL risks. ## Key Takeaways - When smooth sailing turns stormy - Where businesses are most exposed - How brokers can keep clients afloat - Keeping it simple for brokers - Why it matters for brokers ## Contents - [When smooth sailing turns stormy](#when-smooth-sailing-turns-stormy) - [Where businesses are most exposed](#where-businesses-are-most-exposed) - [How brokers can keep clients afloat](#how-brokers-can-keep-clients-afloat) - [Keeping it simple for brokers](#keeping-it-simple-for-brokers) - [Why it matters for brokers](#why-it-matters-for-brokers) - [Reports & Real World Examples](#reports-real-world-examples) 3 min read # One claim can sink a business. Here’s how brokers can keep clients afloat. [Kim Beavis](https://hutchunderwriting.com.au/blog/author/kim-beavis) : 12/11/2025 10:31:04 AM [Claims](https://hutchunderwriting.com.au/blog/tag/claims) [Management Liability](https://hutchunderwriting.com.au/blog/tag/management-liability) Listen To: One claim can sink a business. See how Hutch Management Liability helps brokers protect SME clients from director liability, fraud, and EPL risks. 2:46 ## **When smooth sailing turns stormy** It’s a familiar story: an SME is trading well, directors are confident, and staff are growing. Then a law suite or a regulatory inquiry hits. Suddenly, directors face personal liability, legal fees mount, and companies discover their standard cover doesn’t stretch far enough. These aren’t hypotheticals. When a Director liability insurance claim occurs it can leave brokers’ clients exposed if the right protections aren’t in place. ## **Where businesses are most exposed** **Personal liability for directors** Company directors and officers can be held personally liable for wrongful acts. Without cover, they may need to fund legal defence and settlements out of their own pockets. **Employment practices disputes** Claims for bullying, harassment, or unfair dismissal are common triggers. These disputes can be costly to defend and damage both finances and reputation. **Fraud and crime** Employee or third-party fraud, including social engineering scams, can quickly drain a business’s cash flow. **Statutory and regulatory investigations** Workplace health and safety, tax audits, or breaches of regulations can all trigger action against directors or the company itself. ## **How brokers can keep clients afloat** **Start with education** Many SME clients underestimate their level of exposure. Highlight real-world examples of director liability insurance claims and show how one claim could threaten business continuity. **Present a complete solution** Hutch Management Liability brings together: - **Directors & Officers Liability** – protecting personal assets of directors and officers. - **Corporate Liability** – defending the business entity itself. - **Employment Practices Liability** – covering employee and third-party claims. - **Crime** – including an optional social engineering extension. - **Statutory Liability** – for breaches of workplace, safety, or environmental law. **Optional extensions** also cover tax audit expenses, pre-claim inquiry costs, and cyber fines for insured individuals. ## **Keeping it simple for brokers** - Available exclusively on Ebix Sunrise Exchange (HUTHML code). - Automated quotes for eligible SMEs up to $50M turnover. - Flexible limits up to $5M per section. - Backed by Lloyd’s. - Faster quotes. Smarter underwriting. Fewer headaches. ## **Why it matters for brokers** When a director liability insurance claim surfaces, it’s often too late for clients to scramble for cover. The opportunity for brokers is now to educate, advise, and place protection that keeps clients afloat when the unexpected occurs. The clear way to better cover. ## Reports & Real World Examples - [The Global Insurance Law Connect (GILC) D&O Global Trends 2025 report](https://hutchunderwriting.com.au/hubfs/PDFs/Management%20Liability/D_O_Global_trends_2025_20250213_v1.pdf) ### Five recent private company director liability cases Disclaimer: These examples are illustrative only. Coverage depends on the facts of each claim and the policy wording. 1. ***Care A2 Plus Pty Ltd v Pichardo* \[2024\] NSWCA 35** A private company, DCA Sydney Enterprises Pty Ltd, made representations to Care A2 that funds paid would secure streaming rights for the 2021 Rugby League World Cup and annual revenue of \\$15-30 million. The court found the representations to be false and the sole director misappropriated the funds. [Source: Supreme Court of New South Wales - Court of Appeal Case Notes](https://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/nsw/NSWCA/2024/35.html) **Takeaway:** Even for smaller proprietary companies, directors can be held personally exposed for misleading or deceptive conduct on behalf of the company. 2. ***Kazzi v KR Properties Global Pty Ltd t/as AK Properties Group* \[2024\] NSWCA 143** In a building company context, the sole director and nominated supervisor was held personally liable under s 37 of the Design and Building Practitioners Act 2020 (NSW) for defects and non-compliant works in a six-unit apartment project. [Source: Bartier commentary](https://www.bartier.com.au/insights/articles/nsw-court-of-appeal-confirms-personal-liability-under-the) **Takeaway:** Private company directors in construction and building trades face personal liability for statutory duties relating to building defects and supervision. 3. ***Mandalinic v Stone (Liquidator)* \[2023\] FCAFC 146** A director of RIC Admin Pty Ltd (in liquidation) was unable to challenge a PAYG estimate issued by the Australian Taxation Office via a director penalty notice. The Full Federal Court confirmed that a director cannot rely on an affidavit in separate proceedings to reduce or revoke the company’s estimate under the Taxation Administration Act 1953 (Cth). [Source: ATO Case Document](https://www.ato.gov.au/law/view/document?docid=JUD%2F2023ATC20-879%2F00001) **Takeaway:** SME company directors may face direct exposure for tax-related liabilities via DPNs, and standard business protections may not prevent this personal liability. 4. ***Brown v Etna Developments Pty Ltd* \[2025\] NSWSC 358** A private construction company. The decision confirms that even de facto directors (those who act like directors without formal title) can incur personal liability for negligent acts in a building project. [Source: Bradbury Legal commentary](https://www.bradburylegal.com.au/when-titles-do-not-matter-but-responsibility-does-personal-liability-for-de-facto-directors-in-construction/) **Takeaway:** Reinforces that for private companies in building trades, director liability risk is real and claims could fall under sections of management liability cover. 5. ***In the matter of 1derful Pty Ltd* \[2024\] NSWSC 1414** A proprietary company involved in equity/fiduciary‐duty and fraudulent disposition issues. [Source: Supreme Court New South Wales](https://www.caselaw.nsw.gov.au/decision/19304a621c44f79b1532957a) **Takeaway:** Highlights that directors of private (Pty Ltd) companies may be exposed to claims for allegations of breaching their fiduciary duties to shareholders — reinforcing the need for D&O/management liability cover. - [](https://hutchunderwriting.com.au/blog/management-liability-construction) 1 min read #### [Building is Risky. Managing the Build is Riskier.](https://hutchunderwriting.com.au/blog/management-liability-construction) [Alec Bouchard](https://hutchunderwriting.com.au/blog/author/alec-bouchard) : 04/03/2026 9:00:00 AM [Management Liability](https://hutchunderwriting.com.au/blog/tag/management-liability) [Management Liability for construction business](https://hutchunderwriting.com.au/blog/tag/management-liability-for-construction-business) [Read More](https://hutchunderwriting.com.au/blog/management-liability-construction) [](https://hutchunderwriting.com.au/blog/hutch-underwriting-launches-management-liability-cover) 1 min read #### [Hutch Underwriting launches Management Liability cover](https://hutchunderwriting.com.au/blog/hutch-underwriting-launches-management-liability-cover) [Kim Beavis](https://hutchunderwriting.com.au/blog/author/kim-beavis) : 14/11/2025 9:00:00 AM Now live on Sunrise Exchange \[SYDNEY, FRIDAY 14 NOVEMBER 2025\] — After a successful pilot, Hutch Underwriting has officially launched its Management... [Announcements](https://hutchunderwriting.com.au/blog/tag/announcements) [Press Release](https://hutchunderwriting.com.au/blog/tag/press-release) [Financial Lines](https://hutchunderwriting.com.au/blog/tag/financial-lines) [Management Liability](https://hutchunderwriting.com.au/blog/tag/management-liability) [Read More](https://hutchunderwriting.com.au/blog/hutch-underwriting-launches-management-liability-cover) [](https://hutchunderwriting.com.au/blog/professional-indemnity-insurance-for-consultants-hutch-miscellaneous-pi) 1 min read #### [Professional Indemnity Insurance for Consultants: When Hutch Miscellaneous Combined Liability May Fit](https://hutchunderwriting.com.au/blog/professional-indemnity-insurance-for-consultants-hutch-miscellaneous-pi) [Kim Beavis](https://hutchunderwriting.com.au/blog/author/kim-beavis) : 28/04/2026 4:32:09 PM [Professional Indemnity](https://hutchunderwriting.com.au/blog/tag/professional-indemnity) [Read More](https://hutchunderwriting.com.au/blog/professional-indemnity-insurance-for-consultants-hutch-miscellaneous-pi) --- ## About This Content **Source:** [One claim can sink a business. Here’s how brokers can keep clients afloat.](https://hutchunderwriting.com.au/blog/director-liability-insurance-claims) **Author:** Alec Bouchard **Published:** November 11, 2025 *This content is provided for informational purposes. Please visit the original source for the most up-to-date information.*