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Directors & Officers Insurance
(Every company/charity/club needs it)
Did you know that a Director, Officer or Senior Manager of a limited company can be sued personally for what has gone wrong in the company? The same is true for charities: even worse, members clubs (in law) are usually partnerships in which all the members are jointly and severally liable. (So someone suing a members club will pick on the members perceived to have the most money.)
Company legislation has put more personal responsibilities on to senior positions in limited companies.
Directors & Officers Liability Insurance protects company directors, officers and senior managers against claims made against them personally from their decisions and actions taken whilst managing their business.
Cover may also be extended to include:
- “entity” cover, i.e. your company/charity/club is also covered for its defence in what ultimately may devolve down to senior staff
- employment issues.
Some claims examples: (N.B. these are by no means the only ways you can find yourself in hot water…)
- A director/manager/club official makes a bad decision, costing the company/charity/club a significant amount of money. The shareholders/members and creditors sue him/her.
- A small company has director/shareholders A and B. B dies and the representatives of his Estate are unhappy with a decision A made in running the company. They sue him/her.
- A supplier supplies £20,000 worth of goods and shortly after, before the company has paid for them, the company goes into liquidation. The supplier sues the directors, claiming that they must have known the company couldn’t pay when the goods were ordered and thus they should be made personally liable.
For what it is, cover isn’t expensive. At least find out about it and take a decision from knowledge. Your personal assets could be at risk.
Without insurance, can you personally afford the legal fees involved, especially if you are up against a “no win, no fee” legal firm?
Don’t assume you won’t need it and wish later that you had done it.
Click here for further information.