If a company has directors, key managers or anyone who makes a decision on behalf of the company, Directors and Officers insurance (D&O) can cover the cost of compensation claims made against them. The claims could be made by employees, shareholders or third parties and the policy will not only cover the legal cost of defending these proceedings but also any compensation costs that may arise following an unsuccessful defence.
If an individual from a company is accused of breaching their duties and sued directly, current law states that in some circumstances the individual is forbidden to have the costs of the defence or compensation paid for by the company, therefore without the appropriate cover in place their own personal assets could be at risk. It is a common misconception that alleged misconduct by directors or companies would be covered under other liability policies such as Public Liability or Professional Indemnity.
In the current climate, individuals are becoming increasingly vulnerable as regulators and bodies such as the Health and Safety Executive are becoming more proactive in investigating companies and are now one of the primary drivers of claims. Employees are now more aware than ever of their employment rights and are increasingly likely to sue with the help of “no win no fee” type of arrangements. Another common misconception is that D&O is only applicable to large corporate entities – however, small micro entities face the same risks and regulations as larger companies, often without the back up of a specialist in-house HR or legal department. Claims can even be made against a director who has left the company.
- This policy can provide cover against:
- Employment issues
- Breaches of environmental law
- Breaches of tax law
- Health & Safety breaches
- Errors and omissions
- Financial mismanagement
Considering the fact that even simple investigations when defending allegations of a wrongful act can cost thousands of pounds, purchasing Directors and Officers insurance takes this financial risk away from the directors and officers should an allegation or claim be made, with premiums starting as low as £150 + IPT.
For further advice or information please call 01924 871111
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