Directors and Officers Insurance
Director & Officer Insurance works in a similar way to Professional Indemnity Insurance, but protects the individuals rather than business for any actions or decisions made on behalf of the company. Legally, the directors of a company are different entities to the company that they work for. This means that both company and directors need insuring for this.
With over 150 years of combined insurance broking experience, we can tailor a policy to suit your needs so that you have all the correct cover in place, but are not paying for cover that you don’t need.
As a Director or Officer of a company, you should consider the following:
Increasing action against Directors
Recently the Government and shareholder have become more willing to bring actions for breach of duty against directors and officers of companies.
Since 1993, actions against directors by the Department of Trade and Industry have increased by over 400%. Don’t leave your key staff exposed.
Your legal responsibility as a director of officer
When you take on a Directorship you act as an agent for the company and are legally responsible and accountable for your actions.
Personal assets are exposed to claims against you arising out of business activities.
Who can make a claim against you?
Directors owe a duty to the company and its present and future shareholders. This is extended to creditors – potentially including HMRC – in the event of insolvency.
Claims can be brought by any party with an interest in the affairs of the company.
How much cover is enough?
As a director or officer of a business your personal liability in respect of your decisions is unlimited in UK Law.
Therefore the level of cover you have should be considered carefully. There is no rule, but we recommend taking out as much as you can afford.
What is covered by D & O Insurance?
At Ellis David, we understand how important your business is to you, and how important having the right cover in place for your business and yourself is. We also recognise how different companies need differing levels and varying types of cover.
A typical policy can be arranged to include cover for:
- 2006 Companies Act (over 250 offences)
- Insolvency Act (“Wrongful Trading”)
- Health & Safety at Work Act
- Data Protection Act
- Consumer Protection Legislation
- Company Directors Disqualification Act
- Financial Services Act
- Company Securities (Insider Dealing) Act
- EC Directives and Regulations Racial & Sexual Discrimination Legislation
How does Directors and Officers Liability Insurance work?
The basic level of cover provided operates in two parts:
- Once a claim has been made, and legals fees or compensation are known, the insurer will indemnify (reimburse) any director, officer or employee for their liability for any wrongful act.
- Secondly, the insurer will indemnify the company itself where it has reimbursed a director, officer or employee for such liability.
The policy must be taken out by a company on behalf of the individual.