Directors & Officers Liability Insurance explained, at last.

(definition) – Protecting directors and officers, including other employees acting in a managerial capacity, in the event that they are sued personally in conjuction with the performance of their duties. This includes negligence and failing to act in the company’s or to exercise reasonable business judgement

Here are some examples:

Claims – who could make a claim against you as a director or officer? Any person that may have an interest in the affairs of your company could bring an action. This might include creditors, government departments or investigations by regulatory authorities and indeed the individual customers or employees you represent. I have shown two examples of claims we have dealt with in the past.

Claim 1 following damage caused to a residential block of flats it was discovered that the insurance purchased by the directors was inadequate to cover the loss.  Shareholders of the property (the residents) have notified that they may bring an action and if found negligent the directors would be liable for the uninsured loss.

Claim 2 The directors of a property management company brought an action against a resident for non-payment of a service charge. The resident then issued a counter claim against the directors for an incorrect calculation of his service charge. The directors were robustly able to defend their position knowing they had the benefit of this policy behind them.

Claim 3An Employee on a building site falls through a ceiling and lands on a concrete floor 10 feet below. Although injured, Heath & Safety Executive attend the scheme and caution the Directors prior to explaining they could be personally held liable for the accvident despite having Employers Liability Insurance. Due to changes in legislation Directors are now personally liable if through their own acts of errors, injuries and death on site can be pursued against them as an individual. This not only applies to the director but all employees having a managerial or supervisor capacity in the business.

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