Directors & Officers Liability Insurance is designed to protect your senior management team from claims arising from the decisions and actions that you have taken whilst managing the business.
If a claim is brought against one of the directors of the business for a ‘Wrongful act’ then the director cannot rely on the company providing an indemnity as this is often in contravention of the Companies Act and so it is essential to buy an insurance policy that can protect the individuals
Being subject to a claim can be a challenging and disruptive experience. However big or small, the priority of a Directors and Officers Liability Insurer will be to resolve your claim as quickly as possible, whilst providing you with the personal and proactive support you need to get you or your business back on your feet.
We have put together a couple of Claims Examples submitted to Directors and Officers Liability insurers to illustrate the need for directors to obtain cover
Trade: I T Consultants
Type of Claim: Directors and Officers
Amount: £600,000
The insured had a claim brought against them for alleged trademark and intellectual property infringements. Whilst the claim against the company would not be covered, it was suggested that two of the company’s directors were personally liable in this matter. Sadly, the insured went into administration which led to the claimant focusing firmly on the directors.
Trade: Medical Manufacturing
Type of Claim: Employment Practice Liability
Amount: £350,000.
The insured dismissed an employee following a disciplinary process. The employee challenged the dismissal and brought a claim for unfair dismissal in the Employment Tribunal. It is alleged that he was subjected to workplace bullying following protected disclosures that he made regarding the directors.
Trade: Technology Manufacturer
Type of Claim: Directors and Officers
Amount: £3,000,000
The insured became aware of an improper relationship between a former consultant employed by the insured and a client. The Serious Fraud Office began an investigation in to the insured and its potential breach of the Bribery Act 2010 because the SFO had been advised that the consultant, while holding the consultancy had also been a senior foreign government employee. The insured benefited from several contracts from the same government whilst the consultant was an employee.
The board brought a claim against a director alleging negligence and breach of fiduciary duty arising from his decision to retain the consultant, and therefore potentially breach the Bribery Act. As a consequence, the director brought part 20 proceedings against three former directors alleging that in the event that any breach is found on his part, they should contribute or indemnify him as they should have also been aware of the implications of hiring the consultant. The director also brought proceedings in fraud and deceit against one of the board members alleging he deliberately misled him.
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If you have any questions about Directors and Officers Liability insurance, please contact us today on 01270 758070 where one of our advisors will talk you through any queries.
