D&O insurance: managing your risk

This article originally appeared in the autumn 2016 edition of Telegraph magazine. Download the magazine now.

Imagine you’re the health and safety manager for a business.

Then imagine that, despite following your exact recommendations, a member of staff has an accident that leaves them incapacitated and decides to sue the company.

You might assume that the business will be at risk and have the appropriate insurance cover to protect itself, but there is a chance that the injured party – or even the Health & Safety Executive in this instance – might pursue you for negligence or providing incorrect advice. You’ll potentially be left open to being sued or even imprisoned.

While this hypothetical horror story is extreme, this could happen to anyone with a high level of responsibility within a business. Directors, partners and even managers (or officers, as the cover is known as) can personally be at risk for a range of reasons – not just health and safety.

“I recommend all senior managers consider taking out Directors’ and Officers’ [D&O] Liability Insurance to make sure they are covered,” says Managing Director Chris Gibbs. “While it has an old-fashioned name, it’s invaluable in the modern world. Essentially it covers individuals within a business, whether you’re a director, partner or someone with authority to represent the company – as opposed to the business itself.

“D&O Insurance will typically cover you as an individual – including your defence if the case goes to court. It helps to protect both you and your assets.”

Covering all angles

Chris goes on to explain that D&O covers liability for actions or omissions (in legal terms known as ‘Wrongful Acts’) made while acting on behalf of the company. Claims can be brought for a diverse range of reasons, including breach of trust, negligence, defamation, wrongful trading and pollution – even if they were made with the best of intentions. D&O insurance will also protect against some employment claims and if a company pension scheme goes into administration.

Chris adds that an extension to the policy, known as entity cover, is available too. This add-on product will cover the organisation itself and can be useful if a claim is being made against both the company and an individual director.

“We’ll usually go and talk to our clients on two fronts. It tends to be part of a wider conversation about business insurance. We’ll ask if the individuals want to protect themselves. A company will take it out on your behalf – or the directors will buy it through the company – to protect the senior team.

“You always assume that nothing’s going to happen, and if it does, the company is accountable. That’s not always the case.”

You always assume that nothing’s going to happen, and if it does, the company is accountable. That’s not always the case.

Expert advice

Chris adds that it’s worth speaking to an expert, because there are lots of intricacies that you’ll need to take into consideration.

“I would always recommend speaking to an experienced insurance broker to get some advice on the right cover,” he says. “Find out what they recommend, the cover you need and the cost. They should also be able to give you supporting information and literature, so you’re sure you have the right cover.

I would always recommend speaking to an experienced insurance broker to get some advice

“Of course, I’d always recommend you’d speak to Alan Boswell Group before any other broker though!” he laughs. “Not only are we an independent broker, but we have teams of experts dealing with business insurance all day, every day.

“Our aim is to help you understand, manage and control the risks in your business. Insurance is just a part of that process and is used to protect you against the risks that you’re unable to eliminate.”

To find out more about D&O insurance for you and your business, get in touch. Our expert team will discuss your business in detail and recommend the right policy at the right price. Give us a call on 01603 218000 for details.