Introduction to Directors and Officers Insurance
Mar 29, 2012
With the rise of ‘’no win, no fee’’ lawyers in the UK leading to an ever increasing claims and compensation culture, companies – and Directors in particular – may find that a basic legal expenses policy is no longer adequate for their needs. A Directors and Officers insurance policy may provide the extra cover a company requires.
What is Directors and Officers Insurance?
The policy is bought by the Company for the protection of its Directors and Officers, i.e. managers or indeed any employee in a supervisory role whether that be permanent or temporary.
It will provide cover for such Directors if they are personally pursued for failing in their duties as Directors or managers and will pay any amount which the insured is legally liable to pay resulting from a claim including defence costs, pre investigation costs, investigation costs, awards of damages, award of costs, subject to the agreed Limit of Liability on the policy.
The policies can also generally be extended to include the entity, i.e. the company itself, as well as Employment Practice Liability, Crime and Pension Trustee Liability.
Such policies won’t cover fines, penalties and taxes, remuneration, costs or overheads except in respect of court attendance.
Why would I need Directors and Officers Insurance?
Directors can be open to allegations of negligence or misconduct, unfounded or otherwise. Even unfounded allegations can be extremely expensive, time consuming and stressful to defend so the presence of Directors and Officers cover can provide huge relief at such times.
Directors and Officers cover is one of the fastest growing markets of insurance in the UK and for good reason. Directors' personal assets can be at risk whether they acted deliberately, negligently or innocently. Directors and Officers Insurance is not designed to cover fraudulent or dishonest acts but there are a number of examples where Directors have been found personally liable when all they are guilty of is failing to take sufficient care.
Two areas that could be particularly vulnerable are family businesses and Small to medium sized companies. Family companies make up a large proportion of UK businesses and carry with them exposure for the individuals concerned. Family companies can be a hotbed of dispute – internally and externally.
Small to medium sized companies can often be fast, flexible and energetic with little risk management and few formal control procedures leading to expensive and time consuming mistakes.
How do I get Directors & Officers Insurance?
For further information or to arrange a Directors and Officers quotation please contact myself or any member of Wilby staff.