News Article

Why Directors & Officers Insurance is More Important Than Ever

As a business owner, you will know the impacts that the Coronavirus has had on your balance sheet.

But if you are a director or manager, are you aware of the possible legal ramifications that could arise from the pandemic and affect you personally?

Claims can arise where a third party (for example shareholder, creditor, employee, regulatory body) feels that you have failed in any of your duties.

The potential for claims and court cases against corporate decision makers has been heightened by the virus, especially if your company is a PLC with shareholder responsibilities. A fall in your company shares' value may be seen as the result of mismanagement and ill- advised strategies during the crisis.

As a Director you could be accused of failing to exercise a duty of care over your employees, cutting corners may have led to cases of environmental damage, attributable to the negligence of a particular manager or director. Legal prosecution could arise from a failure to protect against cyber attacks if you have a data breach. Not having had adequate Business Continuity Plans, breaches of contract, there are many other situations where a director or senior manager could personally be subjected to claims by third parties.

Cost-cutting may be a temptation for many businesses during and in the aftermath of the Coronavirus outbreak.

However, we strongly advise that you do not cancel your Directors & Officers (D&O) cover. It could actually be more important than ever.

D&O can protect Directors and Senior Officers of Limited Companies against personal financial loss arising from third party claims of alleged errors or omissions.

It can protect your own personal assets from unlimited liability by paying for legal costs and expenses and damages awarded.

For directors and senior managers without D&O Insurance, the advice is to put a safety net in place, to help protect your personal financial assets (and avoid a possible prison sentence, in the most serious cases). In economically difficult times, the business world could become highly litigious.

Taking out D&O cover now, could assist you if an expensive legal action occurs and needs to be defended at some point in the future.

Like all insurance policies D&O policies are subject to terms, conditions and exclusions. For more information or advice about D&O cover please get in touch.

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