Directors & Officers Insurance
CHAS Insurance provides Directors & Officers Insurance, protecting company leaders and their businesses from legal claims, personal liabilities, and employment disputes in an increasingly litigious environment.
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Directors & Officers Insurance
At CHAS Insurance, we arrange Directors and Officers Insurance for UK contractors, construction businesses and company directors. If a claim is made against you personally as a director or officer, the costs can be significant. Under the Companies Act 2006, directors of limited companies can face unlimited personal liability. That means your personal assets, including your savings and property, could be at risk if a claim is brought against you.
Shareholders, employees, creditors and government bodies all have the right to bring legal action against a director they believe has failed in their duties. Directors and officers’ insurance exists to cover those costs and protect the people who lead your business.
Get a quote for directors’ and officers’ insurance today.
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How Can Claims Against Directors Arise?
A claim can arise whenever a company director or officer is deemed to have failed in their legal duties or responsibilities. This can include a breach of trust and duty of care, defamation and health and safety failures. A claim could be made by a wide variety of third parties, including:
- Shareholders
- Creditors
- Government bodies
- Employees
- Auditors
- Liquidators
- Customers
- Suppliers
Directors’ and officers’ insurance supports costs of defence, legal representation and losses you could suffer as a result of a claim.
If you are a company director or officer and you are unsure what D&O cover you need or whether your existing policy includes employment practices liability, contact CHAS Insurance today.
D&O Insurance
The different types of cover from D&O insurance include:
Directors’ Personal Liability Cover
This protects individual directors and officers personally. If a claim is brought directly against you, this section of the policy covers your civil defence costs and any additional losses the company has not already covered on your behalf.
Corporate Reimbursement Cover
Where a company steps in and covers a director’s costs or losses, this reimburses the business for those payments.
Corporate Liability Cover
This is an optional extension that protects the company itself against defence costs and certain liabilities arising from civil and criminal actions. It can also be extended to cover employment practice claims, including unfair dismissal and discrimination on the grounds of race, sex, age or disability.
The Companies Act
Many directors believe that running a limited liability company protects them personally from legal action. It does not. The Companies Act 2006, which replaced the Companies Act 1985, makes clear that all directors and those acting in a director capacity carry unlimited personal liability across a wide range of circumstances. This applies regardless of company size and regardless of how long you have held the role.
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Frequently Asked Questions
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What is the Main Purpose of Directors' and Officers' Insurance?
Directors’ and Officers’ Insurance protects the personal assets of company directors and officers if a claim is brought against them in their professional capacity. Running a business comes with legal duties, and if a director is accused of breaching those duties, the cost of defending that claim falls on them personally unless insurance is in place.
D&O insurance covers defence costs, legal representation and, in some cases, compensation payments. It also protects the company itself in situations where it has stepped in to cover those costs on a director’s behalf.
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What Does Directors' and Officers' Insurance Not Cover?
Directors and officers’ insurance is not designed to cover every eventuality. A standard D&O policy will not cover claims arising from proven dishonest, fraudulent or criminal acts. It will not cover losses connected to pollution, bodily injury or property damage in most circumstances, and it does not typically cover claims arising from public offerings of securities or from mergers and acquisitions.
Employment claims such as unfair dismissal and discrimination are only covered if the policy has been extended to include employment practices liability. It is important to read your policy documents carefully and speak to your broker if you are unsure what is and is not included.
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Is D&O Insurance Mandatory in the UK?
Directors’ and officers’ insurance is not a legal requirement in the UK. However, many companies choose to take it out as part of a risk management strategy, particularly as the legal responsibilities placed on directors have increased significantly since the Companies Act 2006 came into force. Some investors and lenders may also expect it to be in place before they commit funds to a business. While it is not compulsory, the potential personal financial exposure that comes with a directorial role makes it a sensible and often essential cover for anyone leading a UK limited company.
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Can Directors' and Officers' Insurance Cover Employment Tribunal Claims?
Yes, but only if the policy has been extended to include employment practices liability cover. Employment tribunal claims are handled by the Employment Tribunal Service, which covers more than 70 types of complaints, including unfair dismissal, discrimination on grounds of race, sex, age or disability, breach of contract and redundancy disputes. These investigations are costly and time-consuming, and directors can face compensation claims made against them personally. Making sure your D&O policy includes this extension is worth discussing with your broker before you commit to a policy.