Directors & Officers Insurance

Did you know that a company director can be held personally liable for business decisions (even if your company has public liability and other insurances in place) and that even once you’ve left a company you will still be held responsible for the decisions that you made while you were there?

Directors’ and officers’ insurance (also known as D&O insurance or management liability insurance) will protect your business if a claim is made directly against the directors and officers of your company. Even if you’re the owner of a limited company, personal claims can still be made against you, and therefore a D&O insurance policy can provide invaluable protection.

As a business owner, it’s important that you have the correct D&O insurance in place. Find out how HISL Brokers Limited can help to protect your business.

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What is directors’ and officers’ insurance?

As the director, partner or officer of your company, in the event of a claim being made against you personally, D&O will provide financial protection and cover the costs of defending your case in court as well as settling any successful claims. Even though your company may have liability insurance policies of its own, as a company director or officer it is also worth taking out your own D&O insurance policy to give you added peace of mind if something doesn’t go to plan.

Company directors and officers have significant responsibilities and make hundreds of important decisions on a regular basis. Therefore it’s likely that even the most experienced professional will make the occasional mistake, and having a D&O policy in place will ensure that you can focus on running your business without worrying about your personal financial liability.

What directors’ and officers’ insurance covers

A D&O insurance policy can provide directors and officers with financial protection in the event of the following types of claims being made against them.

This includes:

Defamation.
Health and safety issues (for example if an employee suffers a serious injury at work).
A breach of duty or trust (for example if a customer database that contains sensitive information is leaked).
Employment practices problems.
Pollution.
Failure to act in the company’s best interest.
Negligence (for example if there has been a lack of due diligence in regards to an investment or business deal which has subsequently lost the company money).
The operation or administration of a pension or employee benefit scheme.
Wrongful trading.
A breach of European legislation.

What does directors’ and officers’ insurance include?

If you wish to protect the personal assets of your company’s key decision makers and directors in the event of a personal claim being made against them, then you should consider taking out a D&O insurance policy.

As no-one can predict the future, it’s likely that a claim against one of your directors could come completely out of the blue, and therefore having a D&O policy in place in advance will ensure you’re protected and limit the risk of any personal financial burdens.

The cost of directors’ and officers’ insurance

The premium you pay/level of cover you need will depend on several factors – for example, the nature of your business, the size of the company, how long you’ve been in post and the kinds of risks you face. Your policy will be completely tailored to your needs and provide you with the protection that you require.

At HISL Brokers Limited we understand that cost is important to your business, but it is crucial to ensure that you are properly protected in line with the risks your business faces. With that in mind, we will take the time to understand the specific needs of your business and recommend the amount of cover that is best suited to you.

What else do I need to know about directors’ and officers’ insurance cover?

It is possible for a directors’ insurance policy to provide worldwide cover, in order to protect your directors and officers across national borders. If you operate globally, this could be an important factor to consider, and will offer protection wherever you do business. In addition, as claims can often arise months or even years after the event that a claim relates to has taken place, lifetime ‘run off’ cover provides protection for directors who have left the company or retired, ensuring that they won’t face any personal losses in the future.

How can I get directors’ and officers’ insurance cover?

HISL Brokers Limited have a team of specialist advisers ready to help you get the right protection in place for your business.

We will take the time to understand the specific needs of your business and are committed to delivering a completely personalised service, ensuring that you have the best possible cover at the best possible price.

To find out how much peace of mind costs, contact Paul Kerner or the team by calling: (0)20 7220 9020.

For a greater understanding of how this policy is constructed please see the following breakdown.

Directors & Officers Liability Insurance

This policy is purchased by the company on behalf of its senior management. It protects against breach of duty, neglect, omissions etc.

Coverage can be extended to protect the entity also, in the event of security claims etc.

Possibly most important with this insurance is the assumption of innocence (until proven guilty) which allows for the advancement of costs so that the Director can access legal representation at the earliest opportunity.

Claims examples:-

The Financial Conduct Authority brought criminal proceedings against the Finance Director and the CEO of a publicly traded software company for a misleading trading statement which was designed to entice others to buy shares in the company. In this instance they were found not guilty of knowing that the statements were misleading but they were found guilty of making the statement recklessly. Both were jailed

An acquiring company in an acquisition launched proceedings against the principal Directors of the target company, alleging negligent and/or fraudulent misrepresentation of the financial standing of the company. The amount claimed was the entirety of the purchase price

A fatal accident on-site led to an investigation by the police and the Health & Safety Executive. Charges of manslaughter and Health & Safety breaches were made against the company and its directors

The Food Standards authority took action against a frozen food manufacturer alleging that unsafe practices at their plant had allowed toxic to dye to contaminate a number of the products

A former employee of a playing card manufacturer claimed that she been the victim of continuous racial harassment by her supervisor and that the company had ignored her complaints forcing her to resign

The estate of a deceased employee claimed that a Director of the company employing her was responsible for arranging her death-in-service life insurance cover and had negligently failed to do so

A large private equity firm was contemplating a further investment into a portfolio company, but decided against it after performing its due diligence. The portfolio company alleged that the private equity firm had promised the additional capital. The portfolio company then had to obtain additional financing elsewhere, ran into financial difficulties and declared bankruptcy. The portfolio company sued the private equity firm over its due diligence process, which the portfolio company claimed eventually lead to its bankruptcy.