What is directors and officers insurance?
Many employees and owners make the common mistake that because they are a company director or a limited company, they have no personal liability with regards to their corporate actions. This quick guide will outline why this is not the case, and answer ‘what is directors and officers insurance’?
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It’s true that most companies, no matter how large or small, are protected by insurance policies such as employer’s liability, public liability and business interruption – to name a few. However, the individuals within a business, particularly decision-makers such as directors and officers, are not protected at all. These leaves them vulnerable to legal scrutiny should if they have acted with negligently, without proper authority or they break company procedures.
Complaints can range from ill-considered charges being bought from an old or current disgruntled employee, right through to serious malicious claim made by a customer who feel discontent for the way they have been treated or the way their data has been handled. Some of the more common examples where directors and officer’s insurance could be useful include;
- Police, FSO and FCA investigations against fraud
- ICO action take against a business for illegal use of data
- Actions are taken by HRMC against directors for tax and accounts irregularities
- Wrongful trading or incorrect [payments to creditors
- Actions taken by investor or shareholders who blame a decision-maker for their losses
The importance of directors and officers cover
When you are a growing corporate business with shareholders, investors, creditors and customers, it is vital that you have the peace of mind offered by this policy. Whilst the term officer might seem vague, it covers anyone who has the authority to make a decision. This can include managers, supervisors and anyone who has been tasked with some managerial responsibility.
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The policy in practical terms
So, what is directors and officers insurance in practical terms? The first and possibly most reassuring element of the insurance is you have access to direct advice. Talking to the correct person and the right time gives us the very best opportunity to defuse the situation and minimise the risk of a claim being made. It also helps you receive legal advice to direct claims towards the company as a whole and not an individual.
Should legal action still persist, then the policy will help cover the legal expenses needed to prepare your defence or pay for legal representation in court, or should the worst happen, it could pay towards ensuring you have the best representation at the police station in the event that a director or officer is arrested. Hopefully, you now understand ‘what is director and officers insurance’, and why it is essential and frankly great value for all limited and public businesses.
Get expert advice today
We really believe that business owners, directors and officers overvalue the cover provided by there standard business ins8urance and liability packages. We always recommend getting a D&O policy to place to give you, as a decisions maker, peace of mind. Cover starts from just £7 per month from the biggest names in insurance. Call 01743 770505 to speak an expert advisor or click below to get a quick quote and one of our team will help build you 100% bespoke policy for your needs.
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