In today’s litigious culture, especially following the pandemic, the actions and decisions of company directors, partners and officers are being closely monitored and questioned, which is why you need to ensure your personal liability is protected.
It is widely thought that the directors of a business are not liable regarding corporate business actions as the majority of businesses will have public liability insurance in place. On the contrary, while the company may be covered, the individuals working there are unprotected, which means if you are accused, as a director or officer, of breaching your duties, then actions could be brought against you personally.
Claims could be brought against you by a wide range of third parties, including shareholders, employees, customers, suppliers, creditors and even competitors, who may not hesitate to sue you if they think mistakes have been made and they have been adversely affected. You could be accused of acting improperly, actual or alleged breach of duty, neglect, errors or omissions and mis-statements.
This applies across all sectors, whether you work in the public, private, not-for-profit, education or third sectors and the consequences could be serious. Even if you have done nothing wrong, the effects of such a claim could be very damaging to you and your business.
Mistakes happen, many inadvertently, perhaps due to reporting errors, misrepresentation or failure to comply with legislation or regulations, but the fallout can be extreme in terms of financial outlay and reputational damage. Directors and Officers liability insurance gives you protection in the event of such claims being brought against you, providing the necessary support to pay compensation or defend claims or prosecutions when things go wrong.
To find out more about this important liability insurance and how it could protect you against the many perils facing you in today’s business environment, please contact us. We can advise on the level of cover you need to have in place and arrange a quotation tailored to your specific needs.
What is a wrongful act?
This could be a breach of trust, breach of duty, neglect, error, misleading statement, or wrongful trading, which is attempted or committed by a director, manager, or officer whilst acting on behalf of the company. A wrongful act can result in civil claims, criminal prosecutions, or sometimes both.
Why are individual directors, managers & officers so vulnerable?
People are more aware than ever of their employment rights
Litigation is increasingly risk-free – “no win no fee”
The emphasis of UK law is shifting away from companies towards personal liability
Regulator investigations are far more proactive (to act as a deterrent to others)
What is covered under D&O (Management Liability) insurance?
The main purpose of a D&O policy is to provide financial protection for individual directors, managers, and the like personally against the consequences of actual or alleged “wrongful acts” when acting within the scope of their managerial duties. This includes the costs of investigating and defending as well as financial losses (excluding fines).
Who is covered under D&O (Management Liability) insurance?
All current, future, and past directors, managers & officers of a company and all declared subsidiaries are covered on an unspecified basis. This usually extends also to cover spouses, heirs & non-executive directors.
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