Directors' & Officers' Liability

Directors’ and officers’ liability insurance – also known as D&O insurance – covers the cost of compensation claims made against your business’s directors and key managers for alleged wrongful acts by shareholders, investors, employees, regulators or third parties.

 

Wrongful acts include:

  • breach of trust
  • breach of duty
  • neglect
  • error
  • misleading statements
  • wrongful trading

 

Directors and officers have specific duties, responsibilities and powers relating to their positions, usually set up by their job description. If a director or officer of your company is found to have acted outside of their terms of reference, civil, criminal or regulatory proceedings can be brought against them.

 

 

If directors and officers do not have insurance, they face a greater risk of not being able to defend themselves 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

 

Directors’ and officers’ liability covers claims made by:

  • regulators, e.g. investigations by the Health and Safety Executive (HSE),  shareholders or investors, e.g. for failure to act in the company’s best interest
  • creditors

 

It also covers claims brought in relation to:

 

  • breach of European legislation
  • insolvency

 

Employment practices liability insurance can be bought as an extension of directors’ and officers’ liability insurance. It covers employee discrimination claims, e.g. for unfair dismissal, harassment, or failure to promote a person.

 

Directors’ and officers’ liability does not cover claims made against your organisation as a whole, only those made against individuals for alleged wrongful acts carried out in their capacity as directors or officers.

LEARN MORE ABOUT D & O INSURANCE

 

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