We’re all human, we all make mistakes. In many circumstances, a simple apology and damage limitation exercise is sufficient in order to move on and fight another day, but sometimes the consequences can be much more scary and far-reaching.
Managers, directors and other officers take on huge responsibilities on behalf of their companies. They have to make complex decisions, maybe in a multinational market where compliance regulations and judicial rules are a minefield – but even small local companies are vulnerable when something goes pear-shaped and an employee or stakeholder sues.
Thinking that D&O cover is only relevant for large companies is just one of the myths which needs busting. Here are some more:
- D&O cover is very expensive
No, not in the grand scheme of things. It can be as less than £500 a year. A claim could be many thousands if not millions of pounds and defending it will be costly too.
- Professional Indemnity insurance will cover me anyway
No it won’t. Professional Indemnity covers the business, not the personal liabilities of the Directors.
- It’s not my personal assets that are at risk
Yes it is. If you have been accused of breaching your duties as a director or officer, you are personally liable, even after death.
- Investors can’t sue
Yes they can if company shares lose value as a result of alleged misconduct
D&O cover comes into play in a whole range of business scenarios from wrongful dismissal or sexual harassment claims to failure to comply with regulations, inadequate disclosure in company accounts and even misrepresentation in a prospectus.
And the good news about D&O? Not only can it protect you from personal liability but having it in place could attract the very best top executives to your business, happy in the knowledge that your company ethos is one that considers the financial well-being of frontline staff members who put their necks on the line for you.