Anyone who is a Director or Officer (anyone with any form of authority within a Company) technically faces unlimited liability if a Third
Party alleges that they have carried out a wrongdoing
in their role as a Director & Officer.
Anyone can make an allegation and quite often the allegations are spurious but each
allegation has to follow a legal process which can cost a huge sum of money.
Allegations such as wrongful dismissal, discrimination and acting
outside of their authority are very common.
A Directors' & Officers Insurance policy pays for legal defence costs in the first instance and
can go on to pay any subsequent Damages or Civil Fines/Penalties.
The policy covers individual Directors'/Officers and can also cover the Company
itself in the case of the likes of Health & Safety investigations.
What is Directors & Officers Liability (D&O)?
D&O cover protects the Directors and Officers of a Company in the event of an allegation against them in their role as a Director or Officer. If they deny an allegation, it will provide Legal Defence Costs in the first instance and then go on to pay any subsequent Damages if the allegation is proved.
What is an Officer?
Whereas there is a legal definition of a Director under company law, there is no such definition of an Officer. Almost anyone can be deemed as an Officer of the Company and will therefore be picked up under a D&O policy
Will a D&O policy cover negligent work for a client?
No, this is generally picked up under a Professional Indemnity policy.
Who can make a claim against Directors & Officers?
Almost anyone can make an allegation of a wrong-doing against a Director/Officer of a company. These can range from employees, customers, the Government, Regulators and any Third Party.