D&O insurance

If your directors or management team have legal or regulatory responsibilities to employees, the public, regulators, investors or other directors, then D&O liability insurance should be considered. It is particularly important for companies who have raised or who are seeking investment from external shareholders. All firms that fall under the Senior Managers Certification Regime (SMCR) have an increased risk in making sure they act appropriately. D&O is even more relevant for these firms as it ensures your employees are covered if they unintentionally run afoul of their regulatory responsibilities.

D&O personal liability claims can cover a whole range of issues, from breaching health and safety laws, allegations of cyber-bullying, to misrepresentations in a pitch deck, or errors in financial reporting.

If you have shareholders that own 15% or more of the company then check for a “major shareholder exclusion” – this effectively excludes any claim brought by a shareholder against the business that owns 15% or more of the company’s shares. And should you have shareholders, business activities or contracts with North American jurisdiction, make sure your jurisdiction allows for worldwide claims. Another thing is to make sure your limit is high enough as many D&O plans have an aggregate limit, meaning another director/officer could use it up should a claim be made – leaving you exposed.

It's key to remember that directors and officers insurance only covers claims in connection with how the business is governed - not the business activities it carries out. You may also need public liability insurance and professional indemnity insurance to protect the company as a whole.