Company Director
insurance

How to Insure a Company Director

How to Insure a Company Director?

Although many businesses carry business liability insurance some owners and directors don’t understand the need to protect themselves as well.

As a director or owner of a business in the UK you can be held personally liable for damages or injuries sustained by a client or the general public during the course of the operation of your business.

For this reason, you should pay special attention on what Company Director Insurance is and how to insure a company director to protect him or her from incurring personal financial loss.

Why Company Directors Need to Be Insured

According to UK law, a company director can be held personally responsible for anyone and everyone acting in the line of duty underneath him or her.

What this means is that if a mishap should occur where a client or a member of the public is injured or if they sustain property damage or financial loss due to the direct actions or omissions of an employee, the director can be sued as can the company.

Also, it is a common misconception that directors have limited liability. This couldn’t be further from the truth. Again, directors can be held personally responsible and it is not only the company which can be called to account.

How to Insure a Company Director

What Does Company Director Liability Insurance Cover?

The first thing to understand is that Company Director Liability Insurance covers any type of loss which occurred as the direct result of the actions or failure to act committed by anyone working for that company. This translates to monetary recompense whether it is physical or property damage as well as financial loss.

If a patron stumbles and falls in a restaurant, the director can be held personally responsible. If an employee is sent out to repair an automobile and blows up the engine in the process, the director of the garage can be held personally liable. In like manner, if a real estate agent causes a client to lose money, the director (broker) can be called to task. Bear in mind that you do not need to be called a ‘director’ but may be acting in the role of director.


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The Cost of Company Director Insurance

There are two things which greatly influence the cost of Director Liability Insurance. The first is the amount of perceived risk the insurance company will be taking on. Therefore, a director of a medical clinic would pay much higher premiums than would the director of a house painting company. Obviously there is more risk involved when treating ill patients than when painting a property. The second major contribution to cost is the amount of cover being purchased so that a policy with limits established at £1 million will obviously cost much less than a policy with a £50 million pound limit. One thing to be aware of is that not all insurance companies charge the same amount for comparable cover so it pays to shop around and compare quotes online.

When all is said and done, anyone acting in the capacity of ‘director’ can be held responsible for the actions, failure to act or downright negligence of those acting under his or her direction. For this reason alone, it is essential to understand how to insure a company director. Not only can the company be held accountable for the actions of workers, but so too can directors. Whether this insurance will be tax deductible for your business or the director is up to you in terms of pay packets and benefits, but at any cost, Company Director Insurance can save both the company and the directors from financially devastating law suits.


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