Guidance on Insurance Cover for Directors & Officers

In the current financial climate, it’s becoming harder than ever to make business decisions to protect the future of your company financially, whilst also taking care of your workers. In times of economic uncertainty, companies will look to scrutinise finances, reduce spending and even come to the difficult decision of downsizing and/or laying off staff. And even in the worst cases – such as the recent case of high-street chain Wilko going into administration – a business can go under. Being a director or officer is an important and difficult job that comes with a great deal of risk, which is why directors’ and officers’ insurance should be considered if you’re running a business.

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What Does Directors’ and Officers’ Insurance Cover?

Directors’ and officers’ insurance – also known as D&O or management liability insurance – is a type of liability insurance that protects a business’s directors and key persons from mistakes or errors. These can include acts such as breach of trust, breach of duty, negligent errors, defamation, wrongful trading and health & safety failures.

This type of cover can help to protect company leaders for a wide range of scenarios and can cover both the costs of any legal defences as well as any financial losses suffered as a consequence of the claims, such as a payout.

Liability insurance for directors and officers is recommended for any senior management figures, even if you believe mistakes are unlikely. Unseen and unknown risks are always around the corner, and by having the correct insurance you can ensure business risks from senior leadership can be protected.

Is Directors’ and Officers’ Insurance the same as Professional Indemnity Insurance?

Whilst both insurance types protect businesses against risks, they work slightly differently, and a business will probably need both types of cover. Directors’ and officers’ insurance “protects you as a director and your personal assets from claims of mismanagement or mistakes made in the running or management of the business”, whereas professional indemnity protects the business and the business’s assets if a claim of negligence or malpractice is brought against the company.

Professional indemnity, also commonly referred to as PI, can be as a result of work conducted by any member of staff or freelancer working on behalf of the company and isn’t exclusively related to directors, officers or just senior management. However, if an indemnity claim is made against the business and the directors or officers are culpable in some form (such as hiring a consultant who gave a client bad financial advice, or hiring a freelancer who causes reputational damage through negligent work for a client), then that’s when a D&O policy will protect business leaders.

Find Suitable Cover With The Yorkshire Broker

When it comes to reducing overheads, insurance is something you might look at to achieve this. However, instead of simply reducing your level of cover – or cancelling your policy altogether – you should look to find the most suitable cover instead. If you have an off-the-shelf policy from a national insurance provider, then you might not be getting the most appropriate cover in the right areas.

By working with an insurance broker like The Yorkshire Broker, we can work with you to create a policy that takes your specific business requirements into account, creating a bespoke policy which ensures you have the right cover in the right areas for the right level. It ensures that there’s no wastage, and you’ll only be paying for the insurance you require.

Guidance on Insurance Cover for Directors & Officers

Insurance Made Personal

What Does Directors’ and Officers’ Insurance Cover?

Is Directors’ and Officers’ Insurance the same as Professional Indemnity Insurance?

Find Suitable Cover With The Yorkshire Broker

Insurance Made Personal

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