Directors and Officers Insurance

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What is directors and officers insurance?

Directors and officers insurance is a type of cover that provides financial protection to those who are the director or officer of a company. It will cover the cost of claims for compensation made against the insured person if they are found to be negligent or they act outside their job description.

You might think that you don’t need directors and officers insurance because you are a part of a limited company. Your company might have limited liability, but this does not mean you do too. In reality, your liability as a director or officer is basically unlimited.

You can also be sued if you are part of a small business – no business is untouchable, so the size of the business does not matter in the event of a claim. Even if you are a hugely respected and valued member of staff, your company would be unlikely – or unwilling – to foot any large legal costs on your behalf.

The consequences are serious – if you were sued, you could end up bankrupt with the huge legal and compensation bills.

The fact is that while most businesses are protected through public liability and other insurances, the individuals within the company are often unprotected.

Why do you need directors and officers insurance?

A claim against a director or an officer could come about from any action within the workplace and the reasons are infinite.

Being a director or an officer of a company holds responsibilities and exposes you to personal liability for the actions or omissions your employees may make in the performance of their company duties. This could result in receiving hefty fines or even imprisonment.

The importance of personal protection for all officers

Problems can be caused inadvertently by individuals at any level of an organisation, but those at the top of a business are at a higher risk as they have a greater level of responsibility.