Put simply, if your company has directors or managers then directors’ and officers’ insurance can cover the cost of compensation claims made against them by customers, shareholders, investors, employees or third parties.
D&O cover is rather unique. Whilst other insurances are there to protect a business and its reputation, D&O’ insurance protects the people behind it. This is because being in charge means taking personal responsibility for your actions.
There are literally hundreds of laws and rules you could be accused of breaking as a company owner or director. Health and safety breaches, breach of company law, financial misconduct – these are just a few of the more common types.
Some points for you to consider
A common misconception is that alleged misconduct by directors or officers is covered under other liability policies such as Professional Indemnity insurance
If a director has been accused of breaching their duties, they are personally liable to defend the claim. Their personal assets are potentially at risk if they do not have adequate D&O cover. If a client is unsuccessful in claiming against your limited company, they can then claim against you personally, as the director, and pursue your personal assets.
Claim example 1 – A former Director of a company sued the current Directors, after alleging that they had conspired to deny him his correct pension benefits. The Directors personally incurred costs of £36,000 defending the claim.
Claim example 2 – The estate of a deceased employee claimed that a Director of the company employing her was responsible for arranging her death-in-service life insurance cover and had negligently failed to do so. Defence costs of £16,000.
Claim example 3 – A Director signed a cheque but did not include the word ‘Limited’. The cheque was not honoured and by the time the corrected cheque was re-presented, the company had gone into liquidation. Due to this, the Director was held personally responsible for the value of the cheque, over £30,000.
Contact our friendly team today to find out more:
T: 01403 785775
