Directors’ and Officers’ (D&O) Insurance
Even if your company has limited liability, as a director, officer, or manager of a UK company, you are automatically exposed to unlimited personal liability.
Directors’ and officers’ insurance will protect your personal assets if claims are brought against you for mismanagement of your company.
- Get quote now
- Why you need directors’ and officers’ insurance
- Legislation that will affect your business
- Claims example
- Quote and buy online
Why you need directors’ and officers’ insurance
Every company has a duty of care to its employees, customers, shareholders, and the general public; and as a director or manager, you’re responsible for the overall management of your firm.
If something does go wrong in the running of your business, you can be held personally liable – whether you were aware of it happening or not.
Without protection, you face the risk of having to pay to defend yourself and any subsequent damages if your defence is not successful.
With our online D&O policy from Angel Underwriting, you’ll be fully protected for legal fees and compensation, both in the courts and at tribunals.
Many people think D&O insurance is only appropriate for directors of large public corporations. In fact, directors of small businesses are much more vulnerable.
This is because in a small company it’s more obvious who is responsible.
According to the DTI’s Companies in 2005-2006 report, in that period there were:
- 8,010 prosecutions under the Companies Act (page 32)
- 3,702 companies reported to the DTI for investigation (page 14)
- 1,197 directors disqualified (page 29)
As litigation increases and the public demands greater corporate responsibility from business, having a comprehensive D&O insurance package could prove invaluable.
Legislation that will affect your business
It’s quite a task to keep up with all the new legislation, so we thought we’d assist by providing a brief summary of two recent acts that could directly affect your business.
Corporate Manslaughter Act 2007
The Corporate Manslaughter Act 2007 came into force in April 2008, and states that an organisation will be guilty of corporate manslaughter if a gross management or organisational failing causes a person’s death.
Following pressure from groups such as fack (families against corporate killers), the act shows a determination of the part of government to secure more convictions.
Police investigating any workplace death will have to consider the new offence with the Health and Safety Executive (HSE).
If prosecution is brought, the jury may consider anything it feels to be relevant, including the corporate 'attitude' towards safety.
Companies Act 2006
Although this act makes it easier to set up and run a company, it also significantly increases directors’ duties and personal liabilities.
We recommend a plentiful stock of tea and biscuits if you’re planning to read the Companies Act 2006 in full, but here’s a snapshot of two additions to the previous Companies Acts.
Directors’ duties
The Companies Act 2006 sets out seven general duties in a statutory statement, covering existing fiduciary duties along with the common law duty of care and skill. These are as follows:
- A duty to act in accordance with the company's constitution, and only to use powers for the purposes for which they were conferred.
- A duty to promote the success of the company for the benefit of its members.
- A duty to exercise independent judgement.
- A duty to exercise reasonable care, skill and diligence.
- A duty to avoid conflicts of interest.
- A duty not to accept benefits from third parties.
- A duty to declare to the company’s other directors any interest a director has in a proposed transaction or arrangement with the company.
Derivative claims
The act also introduces a new statutory right for shareholders to sue directors in the company’s name (known as the 'derivative action') on the grounds of negligence, default, breach of duty, or breach of trust.
Claims example
As a director of a timber merchant and saw mill you have always been meticulous about the health and safety aspect of your business and protection of your workforce. You are naturally profoundly saddened by the sudden death of one of your newest, but most experienced and senior employees who joined your firm recently after ten years’ employment with one of your competitors.
Some weeks later, whilst still endeavouring to handle the aftermath of your employee’s untimely death, you are shocked to discover that the Health and Safety Executive is bringing an action against you and your fellow directors for corporate manslaughter. You find yourself facing a claim that hazardous work conditions in your company are responsible for the complications which resulted in your employee’s death.
You and your boardroom colleagues know you could face a difficult time in the weeks ahead but you are at least secure in the knowledge that your D&O insurance will cover the legal costs of your defence, enabling you to protect yourselves effectively and keep your business on track.
Quote and buy online
Blyth Valley has teamed up with D&O insurance specialists, Angel, to offer you The Director’s Insurance Policy online.
The Director’s Insurance Policy is a specialist directors’ and officers’ liability insurance policy for smaller businesses. Here’s the summary of cover and policy wording.
Significant features of our Angel D&O insurance policy
- The policy is written on a claims made basis, meaning that the policy will only provide cover against claims or circumstances discovered and notified to the insurer during the policy period
- Full prior acts coverage is included (unless an alternative retroactive date is specified)
- No policy excess
- Full advancement of defence costs
- Employment practice coverage for directors is included subject to a sublimit of £50,000
Ready to buy? Get quote now
Alternatively, please call us on 0845 370 9030 between 9 and 5.30, Monday to Friday, to discuss how D&O insurance can help to protect your business.
The Company Director’s Manual
The Director’s Insurance Policy includes your free personal copy of The Company Director’s Manual, worth £44. The manual, written by Indicator®, is an indispensable guide to the business environment and everything today’s company director needs to know. Take a look at the topics that the book covers.
What’s more, the manual comes with a useful CD-ROM that contains sample policies, contracts, company law formalities, and tax calculators in Word and Excel.
Independent legal advice
You also receive access to a free helpline that provides legal advice on commercial problems potentially giving rise to liability under your policy.