Directors and Officers Liability


Directors and Officers liability insurance provides financial protection, and therefore peace of mind for directors, in terms of their own liability, when managing a company in a directors capacity.

Small businesses can be just as vulnerable to claims as larger companies and directors of small private companies are subject to similar duties as listed companies.

Under the 1985 and 1989 Companies Acts directors and officers are exposed to over 200 different areas of statutory liability. This means that they can face unlimited personal liability for their actions and decisions on behalf of the company.

Where a director or officer is alleged to have committed a wrongful act (any actual or alleged breach of duty, neglect, trust, omission or error) in performance of their duties they are exposed to a potential liability.

A Directors personal assets may be at risk if they are sued - a claim can be made by anyone who has an interest in the affairs of the company: regulators, shareholders, statutory authorities, employees, other directors and in the case of insolvency, creditors, liquidators and administrators.

For smaller businesses, directors are often a shareholder or major director, and most will not have the resource to defend a claim which may put their business in jeopardy. Many directors believe that they are protected by the limited liability status of their company.