In todays corporate ‘blame culture’, litigation has become a much more popular recourse.

The consequences for you could be devastating. Just because you are a Director or Officer of a limited company does not mean your personal assets are safe.  Personal bankruptcy, disqualification as a director or even a custodial sentence can be a result of a valid or potential claim against you.

Going hand in hand with being a Director or Officer of a company goes all the duties that you will be expected and legally required to undertake. Add to this employment legislation, corporate liability and financial crimes then you are suddenly exposed to potential losses that can easily spiral into six figure numbers.
Even allegations can be extremely expensive, time consuming and stressful to defend.  Just because you are innocent does not stop you getting dragged into expensive litigation.

So, what are your options?  You could take a chance; after all you run your business professionally, know all your staff personally and have perfect relationships with all your customers and suppliers.  In an ideal world, of course this would be the case.  But in this less than ideal world we live in your only other option is to protect yourself by putting in force:

• Directors and Officers Liability Insurance (more commonly known as D&O)
• Employment Practices Liability Insurance
• Corporate Liability Insurance
• Financial Crime Insurance

Directors and Officers Insurance covers costs associated with the defence of any allegation of a wrongful act in performing your official duties as a Company Director or Officer.  This means it takes away the financial risks they face, giving protection should an allegation or claim be made against them. Even simple investigations can cost thousands, if not hundreds of thousands, of pounds.

Allegations and claims can arise from health and safety to mismanagement, from unfair dismissal to harassment and discrimination.  Indeed, did you know that there are over 200 areas of possible non-compliance under the Companies Act 2006 alone?  If you fancy some bed time reading, this document is in excess of 700 pages!

Here are a few claims examples issued by a leading Insurer:

• Directors and Officers Liability – Environmental Prosecution – Under the Environmental Protection Act, Directors are liable for prosecution if their business is suspected of pollution damage.  In one case, charges against a Director went ahead – even though the company had confirmed that their tanks did not hold the contaminant that polluted an adjacent stream.

• Employment Practices Liability – Unfair Dismissal – An employee that was made redundant is seeking damages of between £200k and £250k.  She is alleging that the selection process for redundancy was unfair. Unfortunately, unlike the ex-employee’s solicitor, the Director of the company concerned did not realise that you are not allowed simply to state ‘redundancy’ as a reason, as this is automatically deemed to be unfair.

• Corporate Liability – Health and Safety and Corporate Manslaughter – After an employee died whilst working on site, a Director of the company was charged with an offence under section 37 of the Health and Safety at Work Act 1974.  Furthermore, the court also authorised a charge of corporate manslaughter against the company itself.  The defence of this case cost tens of thousands.

• Financial Crime – Employee Theft of Money – An employee who processed invoices also had access to the supplier creation system.  The employee saw that when invoices were approved for payment, the financial controller examined the largest payment in detail then signed the rest off without checking.  Seeing this loophole in the employer’s company practice, the employee then went on to create a false supplier and made many small payments totaling thousands of pounds over several months.

But it’s not all bad news!  Daulby Read Ltd invites all fellow members of thebestofchester to an independent review of this often omitted and forgotten cover.  Simply contact Brian Gelling on 01244 560122 or Simon Read on 01244 560116 to arrange a no obligation appointment to discuss further. 

Our mission is simple and effective, to provide bespoke solutions to protect you and your business, backed up with the knowledge and expertise of a truly independent, community broker.   We want to work with you for the long-term, and as your business changes we’ll be there to adapt your insurance to suit your needs.

Please see our website link on thebestofchester for more details of Daulby Read Ltd, and the services we offer.