Directors' & Officers' Insurance

If you hold a leadership position and carry a level of responsibility, and certainly if you make decisions about your company’s protocol or investment, D&O could be very relevant if things go wrong.

That depends on the nature and size of your business and the type of risks you face. If you are responsible for a large multi-million-pound company, a potential claim may have a higher value. In which case, you would need a higher level of indemnity. Cover can be arranged from £100,000 up to £10 million, with levels of cover tailored to suit your sector, size and risk profile.

Many people running SMEs don’t have the resources to cover all the legalities involved, which is where D&O comes in, potentially protecting managers from a lack of governance and failure to comply with workplace laws and the potentially expensive legal action that may ensue.

It’s worth pointing out that D&O does not cover prior claims and investigations; deliberate or dishonest acts such as fraud; defined benefit schemes such as pensions based on years of employment and salaries; pollution clean-ups attributable to the Environmental Protection Act 1990; claims from/on behalf of your major shareholder companies; bodily injury and property damage.

D&O insurance protects in respect of claims brought against you for actual or alleged breach of duty, neglect, errors or omissions and misstatements.

It can help you with the cost of defending yourself against allegations, can support you against losses you might experience as a result of a third-party claim, and can cover the financial cost of an investigation. 

D&O can offer protection in the event you’re accused of a wrongful act, including:

• Breach of duty of care
• Breach of trust
• Negligent errors
• Defamation
• Health and safety failure
• Causing pollution
• Mismanagement of pension schemes

As a director, officer, partner or company leader, if  you don’t have insurance, you are at greater risk of  not being able to defend yourself against:

• Disqualification from holding the position of director 
• Civil proceedings, which can lead to hefty legal costs  and awards for damages 
• Criminal prosecution, which can lead to fines and possible imprisonment

As soon as a company individual is given key responsibilities, it’s time to take out D&O insurance because this is the time they may face personal action. 

Small businesses will benefit as individual directors will be protected against complaints, or, you may wish to arrange D&O as your company grows – if it’s traded on the stock market, for example, and you are answerable to shareholders. 

Sole traders don’t require this cover, as there is no distinction between them and their business, but if you decide to register a limited company, you are immediately liable for personal complaints, criminal proceedings or director disqualification.