Safeguarding senior staff: why Directors & Officers Liability should be a business essential

Getting your business insurance right from the off is critical. Often overlooked, however, is liability cover for your directors, officers and trustees. Here’s why you shouldn’t overlook it any further

Safeguarding senior staff: why Directors & Officers Liability should be a business essential

Whether you are a well-established business or a new venture that’s just getting started, your business insurance may well come to decide your future should something go wrong. The right policy could protect you from natural disasters, health and safety issues, stock damage, theft, times where your suppliers let you down and other occasions beyond your control.

But what happens when a decision your director, officer or trustee makes has serious implications on somebody which leads to a claim? Too many business expect their business insurance to protect their executives in such situations, but this is seldom the case. That’s why Directors & Officers (D&O) Liability insurance can be pivotal to your company’s success.

A fine line

We know that directors and officers walk a fine line in the decisions they make. Their choices could impact the company and its shareholders, employees, third parties and the wider community. The stress of making such decisions can mount rapidly, which is why managerial staff from any company in any sector can, do and will make mistakes.

These mistakes could be in the form of simple or complex errors or neglect, breaches of duty or trust, wrongful trading or misleading statements which damage the business. Since investors and shareholders can demand more from directors, since employees and third parties are more aware of their rights and since governing bodies are more stringent on their processes, claims can made from many angles at any time.

Personally accountable

In such circumstances, it is often not the company but the directors or officers themselves who are held personally accountable for these errors. Without D&O liability in place, your directors or officers could face all manner of issues; dismissal, disqualification from acting in a similar role, civil proceedings leading to legal fees and awards for damages, and even criminal prosecution which could lead to hefty fines and imprisonment.

Where the claim made against your executives is not just or is unfounded, the legal fees that accumulate can be extensive, which means you still suffer financially for an issue that was not your fault.

With D&O liability, your management team can make decisions confidently in the knowledge that, should they make a mistake, the appropriate cover is in place. The team at Weir will endeavour to source a policy that is finely-tuned to your requirements, allowing the crucial choices your directors and officers make to help shape the scope of your business for whichever journey it is on.

To assess how suitable your D&O liability policy is as it stands, or to check whether you have cover in place at all, you could benefit from taking advantage of Weir’s free Business Health Check. For this, we will identify the key areas of risk to your business and help you create a plan of action to get your business in fighting-fit condition.