As the world becomes more and more litigious, directors and officers are frequently targeted for lawsuits regarding professional wrongdoing. The financial implications and bad press can be enough to bring down entire companies.
Does my business need a Directors’ and Officers’ Liability policy?
Does your business have:
• Directors
• Key managers
• Have a large or high-profile that is in the public eye
Anyone of these criteria means a Directors’ and Officers’ (D&O) liability policy could be a helpful protection for you and your business.
A D&O policy protects your senior staff against claims for compensation made by investors, employees, shareholders, regulators or interested third parties. The policy can assist with paying the cost of damages, fines, and legal fees for your senior management team.
It should be noted that whilst a D&O policy offers financial protection for claims concerned with alleged acts of professional negligence, it does not include protection for intentionally committed illegal acts, although a D&O policy can cover your directors and key managers if they breach a criminal law, civil law or infringe on a best practice regulation.
For example, should one of your employees be injured or killed in a workplace accident, your HR director could be sued by the employee, their family or even a Health and Safety Executive.
So what do I need to consider?
The number of directors and officers that you have on your board.
A small business with 2 or 3 directors might need &1 million in cover.
The scope of your business and its activities
A larger organisation might need anywhere between &50m - &300m
Should you not hold a D&O policy, your directors and officers face a greater risk of being unable to afford the costs of defending themselves against:
• Civil proceedings which can carry considerable legal costs and awards for damages
• Disqualifications from holding the position of director
• Criminal prosecution which can lead to fines and possible imprisonment