Directors and Officers Liability Insurance cover protects companies’ directors, officers and senior managers against claims arising from their decisions and actions taken whilst managing their business.

The duties of a director have been established through statutes, regulations and case law and can be broken down into the following areas:

• Duty of Care & Skill
• Fiduciary Duty
• Statutory Duty

If a Director is perceived to have failed in any of his duties then a claim could come from any one of a number of third parties including:

• Shareholders
• Creditors
• Government and Regulatory bodies
• Employees
• Auditors
• Liquidators
• Customers
• Suppliers

In a claim situation the Director’s personal assets are at risk. Directors cannot rely on the company indemnifying them. Often such an indemnity from the company will be in contravention of the Companies Act.

Regardless of the stipulations of the Companies Act in the event of insolvency there will be no prospect of the company indemnifying the Directors and Officers.

The Directors and Officers Liability Insurance Policy will pay on behalf of the Director the legal costs and expenses and any civil damages awarded against them