Directors and Officers Insurance – is it necessary?

Directors and Officers Liability Insurance protects senior executives of a company against a claim that may be brought against them and their decisions taken while they are managing a business. It is an increasingly important part of risk management, and is often a deciding factor in attracting the talented managers an expanding company requires.

After all, none of your managers want to lose their personal assets, (car, home or savings), or face civil or criminal actions and costs while defending themselves against allegations, or to be excluded from holding director’s positions. With Directors and Officers Insurance they can be protected against the number of organisations and individuals who can bring a claim against directors, officers, and senior management. These can include customers, employees, shareholders, auditors and creditors. Suppliers and contractors, competitors and Government and Regulatory bodies can also bring a claim – any decisions made which affect any of these parties can lead to a need to defend an action taken.

Some areas where claims could be made against a company director – environmental issues, mergers and acquisitions, health and safety, data protection, race, age and sexual discrimination, EU regulations, wrongful dismissal, negligence, and the Companies Act 2006 covers many possible areas of non-compliance.

The same law applies whether your company is large or small, and whether the director actually holds the title of ‘director’. Where there is no limited liability, personal assets may be involved if the general company insurance is not relevant or if the company goes out of business.

Directors and Officers Insurance has been a standard product in large companies for a while – no director wants the threat of personal liability to be hanging over him, so it makes sense to get an insurance policy that fits in with your business, identifying the wording that is pertinent to your company. Go to an expert – Regency Insurance have specialists in this field and will be happy to talk to you.