Many people mistakenly believe that as a Director of a business, they have no personal liability in regards to their commercial actions. This however is not the case, as whilst Public Liability and other insurance policies protect the business from certain risks, the individuals within the business can still be held personally liable in certain situations. For example, where they have acted without proper authority or breached part of their responsibilities, however inadvertently. Directors & Officers insurance is a complex and diverse product, providing protection for you and your business against personal liability claims.

Personal liability claims or proceedings can arise from any decision made, or acts carried out, in the workplace, however irrelevant it may have seemed at the time. These range from frivolous and occasionally malicious claims made by disgruntled shareholders, who weren’t happy about business decisions, all the way through to official investigations from bodies such as the HM Revenue & customs. Claims and proceedings where personal liability can be involved typically include:

• Claims by investors and shareholders who blame directors personally for their losses
• Actions brought by liquidators, where they suspect wrongful trading or incorrect payments to creditors
• Actions brought by HMRC where insolvent trading or misappropriation of tax payments is suspected
• HSE investigations where negligence is suspected

It is important to note that while the legal definition of a director is reasonably clear, the legal definition of an officer is vague enough to allow claims or proceedings to be issued against people in almost any managerial or supervisory position. So while a business may be confident that all their management team are aware of their legal responsibilities, it is vital to understand that problems can be caused inadvertently by these people.

Directors & Officers insurance can also be referred to as Management Liability insurance. Management Liability is usually intended for SME businesses and provides cover for those accused of failing in their responsibilities as managers. Directors & Officers insurance is usually intended for larger, corporate businesses, to provide cover for those accused in their duties as a directors or officer. They both can include the same covers, however Management Liability is more encompassing of all employees within a business, who have certain commercial responsibilities.

There are certain enhanced cover options that can be included with Director & Officers insurance, such as Employment Practice Liability, Entity Protection, Commercial Crime & Pension Trustee Liability. Should you wish to know more, or would like for Integrum to review your insurance needs, please get in touch or complete our contact form for a member of our team to contact you.