Directors of small and medium sized businesses need to understand their exposures to personal litigation. It could be costly if they don’t. Directors and Officers are exposed:
Financially - they may be personally liable for their actions. Potential claimants can include employees, creditors, customers, competitors and regulators.
Criminally - their liberty could be at stake, and the financial costs of defence can be high, sometimes reaching six figure sums.
Through Investigations - by regulators or trade bodies. An area of risk for directors and a major trigger of D&O claims in the UK.
To their own employees - for instance allegations of sexual, racial or disability discrimination could see directors defending their actions (or inactions) at employment tribunals, as well as in the media.
Not just in the past, but in the future as well. Responsibility and liability for their actions remain with directors, long after they have left the company, even into retirement.
Directors and Officers may be held personally liable to any parties that have an interest in the running affairs of a company, be that a PLC or a Limited company.
Most directors of a company should be aware of directors and officers duties, which are wide ranging and sometimes complex.
This aspect alone means there is a great need for a company to obtain Directors and Officers Insurance (although it should be emphasised that Directors and Officers Insurance (D and O) does not provide cover against every breach of a director or officer's duties).
Directors have limited liability - NO THEY DO NOT!
I don't have a title of "director", so I can't be held liable - YES YOU CAN !
The company can indemnify us - NOT IF IT GOES BUST!
We are only a small company - THE SAME LAWS APPLY!
They cannot touch my personal assets - YES THEY CAN !
For more information about Directors and Officers Insurance speak to me at The Insurance Centre, Norwich Insurance brokers.
