Directors and Officers

This section provides answers to the following questions:-

Why is Directors' and Officers' Insurance Needed?
What Cover Does a D&O Insurance Policy Provide?
How much D&O cover Will my Business Need?
Compare Directors and Officers Insurance Quotes Now

Why is Directors' and Officers' Insurance Needed?

Company directors and officers are exposed to over 200 areas of statutory liability under the 1985, 1989 and 2006 Companies Acts. This means that they can face unlimited personal liability for their actions and decisions on behalf of the company.

Directors and Officers insurance provides cover for compensation and legal costs if they are found to have inadvertently acted outside their terms of reference.

What Cover Does a D&O insurance Policy Provide?

The company can buy Directors and Officers (D&O) cover to protect the personal assets of directors and executive officers and to meet their legal costs. The policy will reimburse the individual for personal liability arising out of what is known as a 'wrongful act'. Alternatively, the policy can compensate the company itself where it has reimbursed a director or officer for a personal liability arising out of a 'wrongful act'.

The policy usually does not cover pension trustee liability (which can be insured separately), fraud and dishonest acts (covered by Fidelity insurance), and Employers Liability.

Cover can vary between insurers but a typical D&O policy will provide cover for:

• damages and/or settlements as well as costs, charges and expenses following:

• an actual or alleged act or omission by directors and officers in the discharge of their duties
• an actual or alleged act or omission by a director or officer who has been assisting an outside company at the request of the insured

• investigation costs which result from any formal, regulatory, administrative, criminal or investigative inquiry
• pollution defence costs on behalf of directors and officers
• loss of documents to specific limits

Although the policy is designed to cover personal liability, the D&O insurance premium should not be classified as a taxable benefit when paid by the company.

How much D&O cover Will my Business Need?

D&O cover does not cost the earth. The cost of premiums depends on many variables, such as business activity, financial strength, number of staff, turnover and so on.

For £1,000, which is a common minimal annual premium for a straightforward policy, a handful of board members will get somewhere between £500,000 and £1m of cover.

Most small companies buy between £1m and £5m of cover, but you should buy as much cover as you can afford. One thing of note is that when the premiums are paid for by the company they can be charged as a tax-deductible expense.

Compare Directors and Officers Insurance Quotes Now

Directors and Officers Insurance Policies will shortly be available here at Coverzones.

Coverzones is the place for cheap business insurance from the UK's leading providers. Our website is also easy to use, thus saving you both time and money. With Coverzones you take a few minutes to fill in one form, specifying your particular business requirements, and we do the rest. Coverzones compares the market on your behalf and presents you with up to 6 of the best quotes available for your business.

Coverzones is not just an online quotation service. We offer each of our customers a complimentary MyCoverzones account where you are free to save quotes or buy, amend, renew and cancel a policy, all in one place. So start saving time and money today and compare small business insurance quotes with Coverzones. With over 700 trades covered, you can tailor your policy to suit your particular business and budget.