Directors And Officers Liability

Serving as a director on the board of a company has never been more risky than today. Regulatory Scrutiny, expensive investigations and lengthy litigation against both directors and the corporate entity place at stake not only the personal assets of individuals, but also the reputation of all involved parties. In the current economic climate you need the added protection of management liability insurance to support you and your businesses and you will be surprised to hear:
  • You are five times more likely to be a defendant in an employment tribunal than suffer a fire loss
  • Race discrimination awards average more than £30k excluding legal costs, There is no limit to compensation in discrimination cases
  • There has been a 24% increase in dishonest actions by staff by theft or deception
  • Directors can face upto 2 years imprisonment for health and safety breaches
  • It is 90% more likely that an Employment Practices Liability (EPL) Claim will be made against the company rather than the individual, and we can now offer this extension to our policies.
  • With prices starting at £126 per year for a D&O + Entity policy covering £250,000

Examples Of Premiums for D&O + Entity Cover

Turnover Band £250,000 £500,000 £1,000000
Up to £250,000 £116 £163.19 £201.50
£250,000-£1,000,000 £142.98 £201.50 £250
£1,000,001-£2,000,000 £196.17 £265.96 £335.11
£2,000,000-£5,000,000 £250 £356 £430.85

The main D&O policy coverage falls into 3 areas:

A- Directors and Officers Liability normally provides indemnity for directors and officers against personal liability arising from claims made against them. These can be from any wrongful act committed or alleged to have been committed by them in their capacities as directors and officers of the company and where there is no reimbursement by the company.

B- Company Reimbursement Section provides indemnity to the company in respect of any payment the company makes to its directors or officers, against whom a legal action has been brought, as long as the payment is legal.

C- Corporate Liability Cover – This is generally an optional cover protecting the company in respect of defence costs and certain liabilities arising out of civil and criminal actions.  It can be extended to include employment practices claims such as unfair dismissal, race, sex, and age and disability discrimination.
(As employment practices claims are usually brought solely against the company, rather than the directors or officers, cover can be very limited unless there is an employment practices’ extension.)

Entity cover can sometimes be purchased as an extension in respect of employment practice claims; this then would provide cover for the company. However, most companies seeking this cover would purchase specific employment practices liability and legal expenses cover to ensure that they are adequately protected.

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