Directors’ and Officers’ Liability Insurance

Regardless of your company’s size, the legal cost to defend yourself as a director or officer or the business itself is substantial, as are the potential penalties that can be personally incurred. To protect you and your business, Directors’ and Officers’ Liability Insurance is essential.

What Does Directors’ & Officers’ Liability Insurance Cover?

Why are you more at risk?
In today’s business climate of corporate transparency and accountability, an organisation’s officers and directors face a myriad of employment-related exposures. Claims can come from many sources, employees, regulators, shareholders, creditors, customers, etc. Ever-changing regulations, increased employee awareness of employment rights as well as the rise of shareholder activism means directors are more frequently at risk, translating to rising claims and escalating settlement costs.

How is it different to Liability Insurance?
Unlike liability policies that provide cover for claims arising from property damage and bodily injury, a Directors’ and Officers’ (D&O) Liability policy specifically provides cover for a ‘wrongful act’, such as an actual or alleged error, omission, misleading statement, neglect or breach of duty.

Potential Legal Costs
The cost of defending D&O claims can run well into six figures, leaving a business financially crippled. Even worse, your directors and officers put everything they have on the line, because in the event of a D&O liability claim, even their personal assets may be at risk. As a result, D&O Liability Insurance has become an essential component of most businesses’ insurance portfolios.

Directors’ and Officers’ Liability questions

In simple terms, claims made against directors or officers of a company arising from any decision made or act carried out by them. These can range from claims made by unhappy customers to official investigations. 

For example, claims by investors and shareholders who hold the company directors personally for their losses as well as actions brought by liquidators, HMRC, HSE investigations and even the Police or SFO where fraud is suspected.

A Directors’ and Officers’ policy provides defence costs and indemnity cover to the entity listed on the policy declarations, which may include:

  • Cover for individual directors and officer
  • Reimbursement to the organisation for a contractual obligation to indemnify directors and officers that serve on the board
  • Protection for the organisation or entity itself

As your business grows and develops, your insurance needs will undoubtedly change. FOCUS will work with you to ensure that the exposure and risks faced by your business will be protected, leaving you with complete peace of mind.

To find out more, contact us.