D & O Insurance
Directors’ and officers’ liability insurance (D&O Insurance) protects you against compensation claims for alleged wrongful acts against your business’s directors and key managers by shareholders, employees, investors, regulators, or third parties.
Wrongful acts include:
- breach of trust
- breach of duty
- neglect
- error
- misleading statements
- wrongful trading
As indicated by their relevant job descriptions, directors and officers have specific duties, powers, and responsibilities that relate to their positions. In the event that a company director or officer is alleged to have breached their terms of reference, civil, criminal, or regulatory measures can be levied against them.
If a director or officer does not have D & O insurance, they have a greater risk of being inadequately protected 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
As an extension of D & O insurance, you may also choose to purchase employment practices liability insurance as an add-on, which would cover employee discrimination claims (e.g. for unfair dismissal, harassment, or failure to promote).
Please note that D & O liability insurance only covers claims made against individuals for alleged wrongful acts carried out in their position as directors or officers, and does not cover your business as a whole.
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