Directors of companies have a complex and challenging job. They make difficult decisions and are subject to scrutiny for their actions. As a result they can find themselves exposed to the risk of personal, civil and criminal liability associated with many aspects of their day to day working decisions.
When a company makes a mistake, who is to blame? In recent years there has been increasing pressure to hold individuals to account. Directors’ and Officers’ insurance (D&O) is designed to protect company directors and managers (officers) and can protect you against claims made by:
D&O Insurance is a complex subject with many options available. We will take the time to identify your needs for this and other relevant insurance products to make sure you’re fully covered. Directors and Officers Insurance is essential for many companies as it protects individuals in the event of legal action.
Every director, senior company executive and manager is a potential target for litigation, whether from shareholders, bankers, creditors, employees, customers, regulators or liquidators. Directors and officers without insurance are effectively risking their personal wealth since the financial implications of a legal action can be disastrous.
D&O Insurance covers two main areas:
There are also a number of additional options:
It is important to reiterate that this insurance covers you and your liability. This is separate to the business’ liability and can aid protection of your personal assets and property.
D&O Insurance is not legally required, although for many companies it would be considered best practice.
D&O Insurance won’t cover claims against the company. It is solely for individual Directors and Officers.
Claims can be brought by anyone who has an interest in the company e.g. customers, employees, shareholders, investors, regulators etc.
There will be a limit to the cover an insurance company is prepared to provide, however there are different options for the level of cover you may wish to purchase. Generally speaking limits are linked to turnover and based on historical claims data to ensure cover is appropriate.