Looking for Directors’ and Officers’ Insurance?
Sometimes referred to as D&O insurance, directors’ and officers’ insurance can offer you a layer of protection should a customer, client or member of the public wish to raise a claim against you.
Quite often, businesses have their own protection such as public liability insurance, but what happens if someone raises a claim against the company you’re a director of and therefore responsible for? If you’re a director or officer and have a direct sway on the decisions that are made, you can be held personally responsible for any resulting corporate actions or wrongdoings – and you won’t be covered under the umbrella of the business policy.
With power comes responsibility
A directors’ and officers’ insurance policy can typically offer you financial protection in terms of any damages you may have you pay out, as well as legal costs which can easily mount up in a short amount of time. This may need to be paid out of your personal finances, so it could be worth taking out protection for your own assets. These claims can come from a variety of places such as:
What kind of claims can be made against a director or officer?
From the small decisions in marketing, to the large logistical ones, you could have a personal claim raised against you if someone feels that the decision breaches an act or has a detrimental effect of some kind. Whether this outcome was accidental or you couldn’t foresee an issue arising, you can still be held accountable for things like:
- Health & safety issues
- Discrimination or harassment
- Legislation breaches
- Wrongful trading
- Breach of duty
- Data protection
- Employment practices
- Defamation/misleading statements
- Administration of employee benefits schemes
It doesn’t depend on the size of the business
If you’re a small business director or officer you might think that you’re not as responsible for your decisions as they don’t have such an impact – however, this is not the case. No matter whether you’re senior in a large corporate bank, or a manager of a shop, you are seen just as liable in the eyes of the law.
Directors’ and Officers’ Insurance – Useful FAQs
There’s quite a vague legal definition of an officer, however it can typically be classed as anyone that holds a position in management or a supervisory role.
Some insurers may offer a reduced monthly premium if you’ve been in the position for a long time and have a proven track record of no claims against you.
Unfortunately, this is not the case. If a decision you made when working at the company has resulted in a claim, even years down the line, you are still responsible for that outcome and can be sued for damages.
There may be a level of shared responsibility that comes into play. Of course, every case is different and handled individually, but if one of the other directors has made a decision and are being sued, it can still have repercussions on you too – even just down to having to pay for legal advice.
The answer is yes, of course every insurer is different, however typically a non-executive director should be able to receive some level of cover.
There are many different things that could fall under this umbrella term such as neglect, breach of trust or duty, error, wrongful trading or even a misleading statement.