Directors & Officers insurance - do you need it?
For many companies, Directors and Officers insurance is seen as essential cover within their insurance portfolio, particularly with the heightened prospect of liabilities and litigations in today’s complex legal environment. But what exactly is D&O insurance and do you need it? Here, we provide some answers.
What is D&O?
Directors and Officers (D&O) insurance provides protection for managers, directors, executives and company board members against claims or investigations that have arisen as a result of decisions and actions they have taken as part of their regular duties. Essentially, it protects their personal liability risk, providing peace of mind and assurance that their home, personal finances and assets are secure if something goes wrong.
In an increasingly litigious culture, particularly post-Covid when directors and officers had to make difficult decisions and subsequently faced scrutiny for their actions, D&O insurance provides protection against a wide range of claimants, including shareholders, competitors, suppliers, employees and regulatory entities.
Typical scenarios
Many people running SME’s don’t have the resources to cover all the legalities involved, which is where D&O comes in, protecting managers from failure to comply with workplace laws and a lack of governance, and the potentially expensive legal action that may ensue.
An example is if you fail to meet investors’ expectations and certain investors take action to get their money back, placing your directors and officers at risk. Or what if you’re accused of not being transparent and withholding information? Angry shareholders and investors could take out a lawsuit, placing your directors and officers at risk. In such scenarios, D&O insurance offers protection against the risk of legal action.
Past, present and future cover
D&O insurance is for current, future and past directors and officers, providing cover for individual acts performed or omitted while they held a position within the company. This ensures that even if the person is no longer on the board, for example, the cover will still protect them for alleged wrongdoing as a board member, as long as the cover is in place.
Our business is your protection
As a Chartered broker, working to the highest professional standards and committed to looking after our customers, we will always assess your demands and needs before recommending a suitable policy. Our priority is to protect you, your staff and your business by providing an insurance solution that offers cover tailored to your specific needs.
We are happy to advise on the level of liability cover you need to have in place, especially D&O insurance, ensuring your business, your executives and their personal assets are protected against claims and legal action where possible. To find out more and ensure you are adequately protected, please give us a call on 01992 703 000 or email insurance@mcdonaghs.co.uk