directors and officers liabilty insurance
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Traditionally only larger companies have purchased Directors and Officers Liability Insurance. However the Directors of smaller Limited companies require the same protection, particularly as your responsibilities become more onerous from increasing regulation and third party awareness.
CoverSupermarket can offer a Directors and Officers Liability policy in conjunction with one of the largest Directors & Officers Liability providers from as little as...
£200 PER YEAR
It is designed to provide you with the financial support. It provides the defence costs for investigations, costs involved in appearing in court and legal costs to fight various forms of allegations, involving any of the Directors. There are legal helplines to assist in the first instance.
Why do you need Directors and Officers Insurance
As a director of a Private Ltd Company or a PLC, a director’s personal liabilities are unlimited whereas a Company’s Liability is limited by shares or by guarantee. When a claim or allegation of wrongdoing arises, a Director’s personal assets are at risk, and it is a common misconception that a Director can expect his or her company to provide indemnity.
Only in limited circumstances are Companies obligated to indemnify their Directors wrongful acts. The Companies Act was amended in April 2005 and now permits companies to provide indemnities to their Directors, but only for non-criminal liabilities to third parties.
The responsibilities and duties of a director have been established through a mixture of statutory regulations & employment law and the duties fall into three main categories:
Care and Skill
a common law duty requires Directors to carry out their duties with ‘the care an ordinary man would take in the same circumstances on his own behalf’ using the skill expected of someone with his or her ‘particular knowledge and experience’.
Fiduciary
Directors must act honestly, in good faith and in the interest of the company.
Statutory
As the regulatory environment becomes more rigorous and onerous, Directors face an increasing array of statutory duties including but not limited to:
- Health & Safety at work Act 1974
- Companies Act 2006
- Insolvency Act 1986
- Environment Protection Act 1990
- Money Laundering regulations 2003
- Data Protection Act 1998
- Fraud Act 2006
- Enterprise Act 2004
Who can bring claims against you?
Allegations of wrongful acts can come from a wide range of sources. Investigations into the activities of a company could come from the Health & Safety Executive, the Inland Revenue a regulatory body or even a trade association. Employees or former colleagues could bring allegations. Customers, competitors, liquidators or auditors are other examples of parties who could have a grievance. Directors can be held accountable for the actions of others, so whilst a director may not have committed a particular act, the actions of a subordinate can have ramifications for the Director.
