Management liability insurance

Protects the personal liability of company directors (also known as directors and officers insurance) for any mistakes or omissions they might make while in the role.

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Why directors and officers insurance?

Your personal liability

Many directors don't realise but if anything goes wrong on your watch, you could be held personally liable for the fallout.

That means legal action, fines, disqualification, or even a prison sentence.

Directors and officers cover – sometimes called management liability or D&O – is designed for this purpose, covering any defence costs and awards made against you.

Responsibility = risk

Power comes with responsibility - to employees, investors, regulators and members of the public.

Personal liability claims can cover a whole range of issues, from breaching health and safety laws, to misadministration of the company pension, or errors in financial reporting.

Even if you always act with the utmost care, it makes sense to cover your back.

PI won't cover you

It's a common misconception that personal liability claims would be covered under a professional indemnity (PI) or general liability policy.

But this is unlikely to be the case. A separate D&O is the only way to guarantee personal protection for those with management responsibility in your business.

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Directors and officers insurance guide

What is directors and officers insurance cover?

First class travel, power meetings, hobnobbing with clients – there are perks to being a director. But it can also be a tough gig. Employees, customers, shareholders, regulators – they all rely on you. They put their trust in you to act responsibly.

Of course you do the utmost to carry out your role with care and attention. But, if something does go wrong on your watch, being a director means you could face a claim for personal liability.

This is where directors and officers insurance (management liability or sometimes it's called D&O for short) – can help. It covers your personal liability for any mistakes or omissions while a company director, including any defence costs and awards made against you.

Who is directors and officers insurance for?

If your directors have legal or regulatory responsibilities to employees, the public, regulators, investors or other directors, then you should consider D&O.

It is particularly important for directors of publicly listed companies and those seeking investment. Investors often ask for this insurance so getting it sorted early shows you take your responsibilities seriously.

What are the risks of not having directors and officers insurance?

Claims can cover numerous issues, whether breaching health and safety laws, misadministration of the company pension or errors in financial reporting – particularly where the individual has acted outside the authority of the company.

Even if you've done nothing wrong, the impact of a claim like this can be catastrophic. You'll be personally liable for any fines, compensation and defence costs, not to mention any criminal investigations. So it makes sense to cover your back with directors and officers insurance.

Things you can do

A personal liability claim isn't something anybody wants to face. Which means avoiding a claim in the first place is your best defence.

As a director, take time to understand all the laws and regulations that affect you and your business, making sure you're on top of everything. And if you don't personally have the time or expertise to do this, then consult specialist advice – it will be worth it in the long-run.

What to watch out for

It's important to remember that directors and officers insurance only covers individual directors and officers, not the business itself. You may also need public liability insurance and professional indemnity insurance to protect the company as a whole.

Also bear in mind that the legal term 'officer' is broad, with the potential to cover numerous individuals in management or supervisory positions. So have a think about who else may be at risk of a potential claim and have them covered too.

Other covers to consider

Professional indemnity

Covers your liability to customers for professional mistakes, errors or omissions in services you provide.

Employers liability

Covers your liability to employees for bodily injury or work-related sickness.

Cyber security

Covers your liability for failing to protect data, as well as penalties for not complying with data protection law.

Contents and equipment

Protects your property against theft, loss or damage.

Public liability

Covers your liability to members of the public for bodily injury or damage to their property.

Commercial legal protection

Covers compensation awards, professional fees and legal costs associated with a range of legal disputes.

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Directors and officers insurance FAQs

What is directors and officers insurance and what does it cover?

Many directors don’t realise but if anything goes wrong on your watch, you could be held personally liable for the fallout. That means legal action, fines, disqualification, or even a prison sentence. Directors and officers cover – sometimes called management liability or D&O – is designed for this purpose, covering any defence costs and awards made against you.

Is it mandatory to take out directors and officers insurance?

This insurance is not a legal requirement, but it can help to think of it be described as professional indemnity cover for people in managerial positions. It’s a common misconception that personal liability claims would be covered under a professional indemnity (PI) or general liability policy. But this is unlikely to be the case. A separate D&O policy is the only way to guarantee personal protection for those with management responsibility in your business.

What is not covered by directors and officers liability insurance?

A directors & officers policy covers you personally against any professional mistakes that you personally make. Personal liability claims can cover a whole range of issues, from breaching health and safety laws, to misadministration of the company pension, or errors in financial reporting.

It does not however cover anyone else in your business from claims against them (you need professional indemnity insurance for these claims). Nor does it protect your business from claims regarding an injury caused on your premises to your employees (employers liability insurance) or members of the public (public liability insurance).

Who do you provide cover for?

Directors and officers insurance is not only suitable for company directors, but also for all people in supervisory positions, effectively anybody who has legal or regulatory responsibilities to employees, the public, regulators, investors or other directors. It’s especially important for people in charge of publicly listed companies and those looking for funding, as most investors will look favourably upon founders who take their responsibilities, and the risks they face, seriously.

What if I’m in charge of several businesses?

No matter how many companies you’re involved in, you’ll be covered for your activities within all of them, as long as you provide this information at the moment of taking out your policy. And if your responsibilities increase at a later date this is easy to change with our pay-by-the-month subscription. Just give us a call and we can update your policy and advise you on any changes to the cost.

What if I don’t hold a considerable share in the company?

It doesn’t matter how big or small a share you hold in a company. If you have management responsibilities, particularly if they’re of a legal or regulatory nature, then you should consider D&O.

What happens if I sell my shares?

Selling your shares in a company may or may not affect the level of D&O cover you need. However, whenever your role or position changes,you should always let us know to ensure your policy is up-to-date.

How much do I need and how much will it cost me?

Both the level and the cost of D&O cover that you need will depend on several factors, such as your company’s (or companies’) activities, its financial stability, how long it’s been operating as well as where it is located. You can find out for sure by getting in touch with us and talking over the details.

How can I pay for my cover?

At Digital Risks, we don’t like to put constraints on anyone, especially our customers. All of our policies are sold as flexible pay-monthly subscriptions, helping you to manage your cash flow, and giving you the freedom to change or cancel your cover at any time.

How do I get an invoice?

Invoices for your monthly payments are available on request, so all you need to do is give us a call (or drop us a line), and we’ll get the requested documents sent out to you as quickly as possible. Alternatively, we can set up your account so that you automatically receive these on a monthly basis.

How can I make changes to my directors and officers policy or make a claim?

Our monthly subscription model gives you ultimate flexibility, with the option to cancel or change your cover at any time. We know that small businesses can grow and change quite frequently, which is why we’ve made it incredibly easy to amend your policy. Just get in touch with us by phone, email or webchat in the bottom right corner of this page.

Same goes for making a claim.We won’t burden you with loads of unnecessary process and paperwork. All you need to do is let us know what happened and we’ll sort everything out for you as soon as possible.

What kind of claims does directors and officers Liability cover?

When you’re in charge, you have to make difficult decisions on a daily basis, frequently under intense pressure. While you’ll no doubt do your utmost to ensure you’re acting in the best interests of the company, and its employees and stakeholders, at all times, occasionally you might make the wrong move - or others might claim you have. If that happens, you could personally face legal claims, fines, disqualification, or even a prison sentence.

  1. You have to be really careful about what you say and how you behave at work, particularly when you’re the one in charge. Sometimes, things slip out that you don’t mean, or in the heat of the moment, and you could find yourself with discrimination or harassment claims to deal with. If that happens, D&O will help you defend yourself, covering any legal or settlement costs that might result.

  2. As a company director, chances are you handle a lot of business relationships personally, especially if you’re a small business. However if you decide to move on to a different company and take your contacts with you, your previous employer could take you to court. In this situation, your legal costs and any resulting compensation will be picked up by your D&O policy.

  3. Staying up-to-date with ever-changing rules and regulations isn’t easy, but it’s vital if you want to stay on the right side of the law. In many cases, any regulatory issues or claims would fall on the company as a whole, however if you personally are found at fault, an individual claim could be made against you for malpractice. And once again, D&O would have your back. Though it might be your mishap, you can rely on this cover to have your back.

What else do I need?

As D&O is specifically designed for people in charge, you’ll also need to take out policies that protect your business as a whole. For example, you’re legally required to take out employers liability insurance, which protects you against any claims of accident, illness of injury from employees. And with Digital Risks, EL comes as a package deal with both Public and Product Liability cover, which will protect you from claims of accident or injury from members of the public, as a result of your activities or products.

Another important cover to consider is professional indemnity insurance, which protects your business in the event of a claim for professional oversight or malpractice. It’s like D&O but for your company as a whole.

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