How to Insure a Director

How to Insure a Director?

In these times of economic pressures, more and more people are indulging in pointing the finger at anyone else when things go wrong.

Litigation is at an all-time high and it is not uncommon for shareholders or even employees to bring suit against a director, or even the entire board of directors, when business doesn’t go as expected.

Being a director of a company carries with it huge responsibilities and why it is of utmost importance to learn how to insure a director in order to avoid personal and company financial loss. The type of insurance which would be most appropriate would be Director Liability Insurance.

Why Directors Liability Insurance Is Important

Perhaps the biggest cause for concern when acting as a director of a company, no matter how large or small, is the Companies Act of 2006.

There are potentially hundreds of areas where a company can be found to be noncompliant with legislation and there are times when huge penalties are imposed. These can result in suit being brought against the director or directors thought to be responsible for non-compliance.

Then there are such things as corporate manslaughter, mergers and acquisitions, the Data Protection Act, discrimination, consumer protection and the list goes on and on and on. Both the company and directors can be held accountable and the best protection is to carry sufficient Directors Liability Insurance.

How to Insure a Director

Common Areas of Misconception

One of the most common mistakes that many people have is in the nomenclature of their positions. Simply because they don’t hold the title ‘Director’ does not mean they are not acting in that capacity.

What does this mean? It means that, by law, they can be held accountable (liable) for the direct consequences of actions within their company.

Directors do not have limited liability, as many people believe, which means they can indeed be held liable for the actions of those under them.

As well, if the company goes under there is no way it can indemnify you and even small companies are responsible for following the same laws that major corporations are bound by. Bear in mind that your personal assets are not immune to seizure if you are held liable for significant losses a company cannot pay.

back to top

Where to Find Directors Liability Insurance

After assessing whether or not you are acting in the role of director the first thing you will want to do is research a variety of insurance companies that sell business insurance. Whilst there are still numerous brick and mortar insurance agents available to meet with, you may find that you can get better prices and better cover by taking a few moments to compare online quotes.

Don’t settle for the first company that looks good to you. Compare Directors Liability Insurance quotes between several providers in order to find the best cover. Price may be an issue, but more importantly, you need adequate cover to protect both yourself and your company. If you need to keep cost down, shopping online provides discounts in ways that local agents can’t afford to provide. Multi-policy discounts and online discounts often apply so seek those out first.

Remember, just because you may not hold the title of Director doesn’t mean that you can’t be held accountable for the actions of a company or the company’s employees if you are acting in that role. Your personal assets are not immune to being seized as compensation if you are found to be at fault. Protect yourself and your company by carrying sufficient Directors Liability Insurance. In today’s world, people are litigation happy and will take you to court over the smallest perceived offense. Don’t leave yourself open to loss when insurance is readily at hand. You never know when you may need it so act quickly before you regret it.

back to top