D&O Fills the Cover Gap

In today’s business climate of corporate transparency and accountability, an organisation’s officers and directors face a myriad of employment-related exposures.

Regardless of your company’s size, the legal cost to defend a director is substantial, as are the potential penalties that can be personally incurred.

Unlike liability policies that provide cover for claims arising from property damage and bodily injury, Directors and Officers Insurance (also known as D&O) provides a solution. A D&O policy specifically provides cover for a ‘wrongful act’, such as an actual or alleged error, omission, misleading statement, neglect or breach of duty.

A D&O policy provides defence costs and indemnity cover to the entity listed on the policy declarations, which may include:

  • cover for individual directors and officers
  • reimbursement to the organisation for a contractual obligation to indemnify directors and officers that serve on the board
  • protection for the organisation or entity itself

Below are a few examples of where it can all go wrong:

Property developer agreement to purchase land for development without shareholder approval

Two directors acted outside of their authority and committed the company to an agreement to purchase land for development without approval of shareholders. The evidence established that the claim was unlikely to succeed, and that the board were provided with adequate information in terms of this particular transaction. Simply put this was a fallout between personalities with axes to grind, however the insured still incurred legal costs to investigate allegations. The insurer defended the legal action until common sense prevailed, with total legal costs of nearly £750,000.

Health and safety investigations

An employee of our insured was asked to attend an interview under caution by the Health and Safety Executive. A member of the insured’s staff had suffered injury following a fall whilst working from height. The insurer provided support and paid for costs for legal representation.

For further information or a quotation please get in touch.

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