There may be reasons why a business may not purchase Directors & Officers Liability (D&O), such as “It’s never going to happen to me so I don’t need it” or “I don’t really understand what it is” or “It’s just another cost on top of my other premiums”.
Unfortunately, there are probably more reasons why a business should purchase D&O, and here are 10 for starters….
1. Personal assets. Directors are personally liable to defend a claim of any alleged breach of their duties. So if they don’t have adequate D&O cover in force their own personal assets could be at risk
2. Regulators. Investigations by the regulators are becoming more and more common, with the Health and Safety Executive being a main player, who have the power to investigate and impose fines
3. Defence. If a director needs to defend an allegation, then this can be costly. There is a simple equation I use – defending a claim (time x legal services) = lots of money. Add to this the stress and disruption it may cause then a D&O policy really makes sense
4. Employment. Allegations from your staff of such things as sexual harassment or wrongful dismissal can result in large settlements against the company
5. Bankruptcy or insolvency. Creditors are entitled to take legal action against directors should they feel that they have not acted in the best interest of the company
6. D&O is not part of any other liability policy. D&O is a separate product in its own right, and no similar cover is found in other products such as Public Liability or Professional Indemnity
7. Investors. If, following an alleged misconduct, investors lose value in their shares then they could seek compensation
8. SME’s. It is not just the larger companies that are at risk, SME’s are just, if not more, at risk as they may not have the benefit of an in-house HR or legal team
9. It helps recruitment. Senior managers and directors will feel protected and cared for by the company if D&O is in place, which can only be a plus when recruiting senior roles
10. It’s not that expensive! Premiums can start from a few hundred pound, compare this to the potential cost of defending a D&O claim which can very easily be tens of thousands
For more help and advice on D&O or any the business insurance then speak to G3 Insure or visit G3 Insure D&O
