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Qdos Directors & Officers (D&O) Liability InsuranceThe threat of personal litigation against the directors and officers of companies of all sizes continues to increase, yet many small to mid sized businesses are oblivious to their exposures. This could prove to be costly in time, monetary terms and possible imprisonment.
Directors’ personal assets, their houses, savings and pension funds, are at risk, whether they have acted deliberately, negligently or innocently. Mistakes can be very costly. D&O Insurance is not designed to cover dishonest or fraudulent acts, but there are plenty of examples of directors found personally liable when they haven’t been dishonest, deliberate or fraudulent - just failing to take sufficient care - in which case awards and defence costs would be covered.
Directors and officers are exposed:
Financially – they are personally liable for their actions. Potential litigants can include employees, creditors, customers, competitors and regulators. Over 1,500 directors were disqualified in 2004 and Disqualification orders are from 2 to 15 years. Even after the ban the stigma remains: credit history and personal reputation can be permanently damaged.
A director was sued by a group of his shareholders for negligence after the company's fortunes declined rapidly. After consultation with lawyers, it was decided that the best course of action was to settle out of court. The D&O insurance funded the final settlement as well as the legal costs. The sums involved would have been sufficient to personally bankrupt the director in question.
Criminally - their liberty is at stake, and again, financially, the costs of defence can be high, sometimes reaching six figure sums. Directors could go to prison, for their actions, inaction or ignorance. The very best defence can be invaluable, but very costly. D&O Insurance cannot cover the criminal penalties - that is against public policy - but it can cover the costs of defending a claim up until the point guilt is established.
An HSE investigation into a fatality at work turned into a full-blown public enquiry which
one of our clients was required to attend. Our policy funded his legal representation
at the enquiry and enabled him to demonstrate that the fatality had not arisen out of
any negligence or wrongful act on his part.
Through Investigations by regulators or trade bodies - An area of high financial risk for directors and one of the biggest triggers for claims in the UK. It’s very easy to complain about a company. The DTI’s Companies Investigations Branch considered complaints against almost 5,000 companies last year. The financial risks of investigations are considerable – Qdos Underwriters pay out more for investigations in the UK than anything else under D&O cover
A director of one of our UK clients was sued by one of his distributors. It was alleged that he had deliberately breached an exclusive distribution agreement and that he had used commercially sensitive information within this agreement for personal benefit. Eventually the distributor dropped the case against our client, but not before the underwriters had funded some £200,000 of defence costs.
To their own employees – for instance allegations of sexual or racial discrimination and with new laws on disability discrimination, directors could easily find themselves defending their actions, or inactions, at employment tribunals, as well as in the media. Not just in the past, but in the future as well. Responsibility and liability for their actions remain with directors, long after they have left the company, even into retirement.
Given these trends and the threat of unlimited personal liability facing directors and officers sales of this type of insurance is on the increase. Businesses of all sizes are threatened. Qdos Directors and Officers Liability policy offers executives protection from the financial consequences of their past, present and future actions. Cover includes defence costs against actions which could threaten their own personal assets and possibly lead to imprisonment.
I have Legal Expenses cover so why bother?
Legal Expenses policy limits are much lower (e.g. £50,000, £75,000, £100,000) which is inadequate for larger protracted actions. Legal Expenses insurance only responds when an insured has reasonable prospects of success. It’s precisely because directors might well lose an action that D&O insurance is so essential (to fund defence costs or settlements). Faced with a career and lifestyle-changing crisis they will not want to rely on legal expenses policy that will only cover them if they are likely to win. Statement of Demands & NeedsIt is important that before deciding to purchase a Qdos product you consider whether the insurance is appropriate for you.
You should read thoroughly all the product information we have made available to you, in particular the Specimen Policy Wording together with the Summary of Cover (Key Facts) before deciding to purchase your chosen product. These documents contain the full Policy Terms and Conditions.
Please note that you are basing your purchase solely on your own interpretation of the information we have provided.
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Click here to view D&O Policy Summary |
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Click here to view specimen D&O Policy Wording |
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Apply online...Qdos Directors & Officers Liability Insurance is now available from our online shop. Please click here to visit the shop and apply online.
Once you have added Qdos Directors & Officers Liability Insurance to your shopping basket you will be required to register for a Qdos account. Once registered you will be asked to complete a short application form where you can decide whether you wish to include the optional EPLI or Crime Cover options and select your required limits of indemnity.
Our system will provide a quotation based on the answers you provide in the application and will give you the opportunity to pay online, over the phone, or by cheque.
As soon as your premium has been paid we will issue your policy documents via your Qdos account.
If you have any queries regarding this product or the application process please contact us on 01455 850000 or by sending email to leiunderwriting@qdosconsulting.com.
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