D&O and Legal Expenses
DO YOU NEED DIRECTORS AND OFFICERS INSURANCE? ARE YOU LOOKING FOR INSURANCE COVER FOR LEGAL EXPENSES INSURANCE? M&DH INSURANCE HAVE THE RIGHT INSURANCE POLICY FOR YOU.
What is Directors and Officers Insurance?
Directors and Officers Insurance cover protects companies’ directors, officers and senior managers against claims arising from their decisions and actions taken whilst managing their business.
What are a Director’s Responsibilities?
The duties of a director have been established through statutes, regulations and case law and can be broken down into the following areas:
Duty of Care and Skill
This is a common law duty that requires Directors to act with ‘the care an ordinary man would take in the same circumstances on his own behalf’ and with the skill expected from someone with his ‘particular knowledge and experience’. Where duties are delegated the Director is responsible for ensuring that the person to whom the duties are delegated is sufficiently experienced, reliable and honest.
Fiduciary Duty
Directors must act honestly, in good faith and in the best interest of the company and must ensure that he does not have any conflict of interest.
Statutory Duty
There are many statutes that affect the conduct of Directors and Officers including the Companies Act 1985, Insolvency Act 1986, Financial Services Act 1986, Environmental Protection Act 1990, and Health and Safety at Work Act 1974, to name but a few.
The Changing Environment
Some Points to Consider:
- Regulation is increasing
- There is a greater awareness on the part of third parties of the duties and responsibilities of a Director
- Shareholders and other third parties are becoming more aware of their rights
- Lawyers are now able to act on behalf of plaintiffs on a no win no fee basis.
Why should we buy Legal Expenses Insurance?
As a company there any many aspects which distract us from being able to run our businesses effectively and efficiently, and which can ultimately end up costing the company considerable amounts of money.
Legal Fees insurance is designed to protect businesses from the costs of potential disputes and equally to try and avoid the problem actually occurring wherever possible.
Legal Advice
In built to every policy is a 24 hour, 365 day legal helpline which is designed to provide you with advice and guidance on all legal matters completely free of charge: By acting without expert assistance, it is very easy to get things wrong either procedurally or in law after which time your position may be severely compromised. This could end up costing you your business.
Where am I most at risk?
One of the most complex areas affecting businesses is related to employment. Over recent years, many new laws have been introduced to protect the rights of employees and the consequences of not acting correctly in the circumstances, could lead to a potentially disastrous award being made against the company.
The limit for an award is now £50,000 or without limit when the claim involves discrimination. Employees now have protection after only 12 months employment. In addition there are the costs of engaging those professionals to represent your in interests throughout the dispute and at any potential Employment Tribunal. Can your business afford to bear these costs?
Tax investigations (PAYE, NI , VAT) are another risk that companies face. Not necessarily because you have done anything wrong, but purely because if you are subject to an investigation, you will need the services of a professional. Remember, once the investigator has departed, you will be responsible for the costs of the professional advice and time you have received not the taxman!
Recovery of your money, contractual disputes with either customers or suppliers, disputes over property, are all other areas where problems regularly occur.
What does it cover me for?
- Employment disputes & restrictive covenants
- Option to include tribunal awards
- Property disputes
- Debt recovery
- Personal injury
- Contract disputes (£1000 limit of Indemnity)
- Jury Service allowance
- Legal defence
- Statutory licence protection
- Data protection
- Tax Investigations
- Up to £50,000 limit of indemnity
Are there any conditions?
The one major condition for the insurance to fully protect you is that you must ring the Helpline immediately after you become aware of a potential dispute and in respect of employment issues, before you take any action towards an employee. Our legal experts will talk through the problem with you and give advice on how you should deal with it. On the basis that you follow the advice, you will be protected against legal fees incurred with our agreement. (Subject to normal policy terms and conditions).
