Whilst corporations and businesses are protected by liability insurance, those running the business – directors and officers – need to be protected against a variety of claims. Directors and officers liability insurance, also called D&O liability insurance, is a way of looking after oneself in case of inadvertent breaches of the Companies Act, as well as a number of other risks.
Directors, managers, and administrators make decisions in the workplace that can have a knock-on effect for a range of people tied to the business, such as shareholders. If this decision results in their financial loss, or legal proceedings against the company, they will expect remuneration which can be extremely costly. In this case, it is important to have D&O coverage.
Public and employers’ liability in the event of a claim against the company.
What is D&O Insurance?
If you are searching for directors and officers liability insurance, you are probably the manager or director of a company. With that position comes great risk and responsibility, including both external claims (from employees, stockholders, or suppliers for example) and internal claims (made by subsidiaries or the company itself against you). With a breadth of potential pitfalls, which you would hopefully never comes across, you need to be protected against all possibilities.
D&O insurance brokers, like many of our partners, understand the nature of your job and the importance of full coverage. There are a number of aspects that could become a claim, such as:
investors and shareholders believe your actions resulted in their personal losses
liquidators’ actions wherein incorrect payments to creditors are suspected
instances of action brought by the HMRC against the company as a result of unpaid or incorrect tax
negligence is suspected and an HSE investigation is implemented
police investigations where there is suspected fraud
Company director liabilities can be numerous and all the above can have a negative impact not just on shareholders, but it can harm the reputation of the company as a whole. In this instance, you would need cover so you are able to deal with the issue and keep the business running smoothly.
It is worth noting that the legal definition of an officer is relatively vague, and can sometimes extend to managers or supervisors where they are the head decision maker. Whilst company directors should be aware of their responsibilities in terms of the law, it is worth noting the hierarchical issues that can arise at all organisational levels.
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