As Directors, Business Owners, and Officers of a company, you are always thinking of everyone else in your business, from your customers or clientele to your employee – the driving force behind your work. But would we be right in saying that you often forget about thinking about yourself when it comes to insurance, you’re probably the last person that you think of covering? In a world where we are so conscious of making sure that your workers are protected at every cost, it is easy to say ‘I’ll do it later’ when it comes to yourself. But do you understand the risks that you are putting yourself AND your employees at if you don’t ensure that you have the correct cover? Learn more with Todd and Cue today…
What Is Directors And Officers Liability Insurance?
Directors and Officers of a company have specific duties, responsibilities and powers given by the position that they work in. These will be outlined in their job description, or terms of reference and must be taken seriously. If a Director or Officer of a company is found to have acted wrongfully, outside of these outlined terms, then civil, criminal or regulatory proceedings can be brought against them.
Directors and Officers liability insurance is also known as D&O insurance in the industry, and it simply covers the cost of compensation claims made against a business’ Directors, Key Management team and/or Officers, for allegations of wrongful acts. These wrongful acts can include:
- Breach of trust
- Breach of duty
- Misleading statements
- Wrongful trading
And if a Director or Officer does not have the sufficient insurance cover, then they will face a greater risk of not being able to defend themselves against any disqualification from holding the position of Director, Civil proceedings which can lead to hefty legal costs for damages, and/or Criminal prosecution which can lead to fines and possible imprisonment.
Why Do I Need This Cover?
Today’s business climate of corporate transparency and accountability means that business Directors and Officers can face countless employment-related exposures. Claims can be made from any source, whether it be employees, regulators, shareholders, or customers, and with ever-changing regulations, increased awareness of employment rights for example can pose a threat to Directors and/or Officers being at risk, meaning rising claims and increasing settlement costs.
If you’re reading this thinking “surely it is just larger organisations who would need this cover?” then you are wrong. Regardless of the size of your business, you could always be at risk and the legal costs to defend a Director/Officer is substantial, in addition to the potential penalties.
Our Todd and Cue Directors and Officers Liability policy covers claims made by regulators, for example Health and Safety Inspections, or shareholders and investors. It can also cover claims made by creditors, and claims brought in relation to breach of European Legislation and/or insolvency.
Directors and Officers Liability cover sometimes covers defence costs arising from criminal regulatory investigations into your business, where no actual wrongful act has been alleged against a Director/Officer.
In addition to this policy cover, you can also purchase Employment Practices Liability insurance as an extension, to cover employee discrimination claims, for example; unfair dismissal, harassment, or failure to promote a person.
This insurance policy does not cover claims made against a business’ whole organisation – only those made against individuals for alleged wrongful acts carried out in their role of Director or Officer of the business.
If this blog post has got you thinking about what cover you currently have in place for your business’ Directors and Officers, then why not get in touch with us today to discuss our policy in more depth and our professional team can answer any questions you may have. Give us a call on 0191 482 0050 or drop us a line at firstname.lastname@example.org.