Directors and Officers
At a glance
- D&O cover is essential for companies of all sizes, but many customers seem to be reluctant to have it
- D&O cover can protect companies and individuals from potentially devastating claims cases
- Read our five myths relating to D&O cover and why it is essential cover in today's world.
It’s important to have, easy to arrange and not as expensive as it is perceived to be. Yet too few UK directors and owner-managers have director and officer (D&O) coverage.
"Society is now more litigious and D&O cover offers a wide safety net. The perceived need for it is low, but if you scratch below the surface and think about the exposures you and your business actually has, your tone may change," says Ian Mantel, Director at Manor Insurance Services.
Here are the five top myths relating to D&O cover that we hear and why it is important for the protection of your business that you put it in place.
1. D&O is only for those running public limited companies or in very large private businesses
Many directors automatically assume that D&O cover is only for multi-millionaire businessmen, such as Lord Alan Sugar or Donald Trump, who may be susceptible to potential liability quite frequently. But that is not the case.
"Every director or officer is open to claims", says Ian. "Claims can come from absolutely anywhere: customers, competitors, suppliers, employees, the company itself, regulators, as well as governmental and law enforcement agencies."
A good way to consider D&O cover is to catastrophe cover such as fire, something that we are all used to taking out as individuals to protect our personal assets.
2. We don't need D&O cover because the directors are covered by their limited status
Many directors assume they are covered by their limited status, but this is not the case.
The policy helps to protect against the loss of personal assets; in some cases individuals can be held liable for corporate taxes or for environmental mismanagement claims. It can also provide defence costs against actions that could put them in jail; directors risk jail time for health and safety legislation breaches or corporate manslaughter, for example.
"Shareholders' liability is limited, but that of directors and officers is not, even if an individual is both," says Ian. "Liability that is attached to the role of being a director and so the director's or officer's own cash, home, pension pot, other assets and even their liberty is at stake should a claim occur."
3. It's too expensive
It always comes down to cost, but adding D&O cover to your insurances can be as low as an additional £100. "It's the company, not the individual, that pays the modest premium," says Ian.
D&O cover is not as expensive as it is perceived to be and is always going to be cheaper than the possible alternative.
4. It's hard to arrange
As with all things, people are wary of what they don't fully understand and so you might be tempted to reject D&O, without fully realising the potential benefits.
"Arranging D&O has been hugely simplified from where it was even 10 years ago," says Ian."For anything less than a public limited company, we only ask for financial information such as turnover and confirmation that they are solvent. It’s often as simple as that."
You can even purchase online in less than 10 minutes by clicking here.
5. It’s not a real risk
A common assumption by many directors is that in the event of an incident involving directors, the company will pay their defence costs should an action be taken against them.
This may be true in some circumstances, but there are many situations where the company may be unwilling, unable or not permitted to protect their directors and officers in this way.
There is another reason why directors should consider it as routine as taking fire or liability insurance. Directors are liable to imprisonment, loss of the family home and their assets and extraordinarily high legal bills under many statues currently in force in the UK.
"With most directors recognising the importance of company legal expenses insurance it is amazing how few protect themselves personally by arranging D&O cover for their firm", says Ian "There really is no excuse now and I urge all Boards to bring this up on their next meeting and ensure cover is arranged without delay!".
Let us review your insurance with no obligation
We're happy to review your insurance for you - over the phone or with a personal visit - you decide. We'll look at the risks your business faces and discuss the options available to insure these. We'll then provide a full quotation - all with no cost to yourself.
Manor Insurance Services have been providing professional advice since 1990. We've built our reputation by paying personal attention to our clients' requirements and providing cost effective insurance solutions.