You may be the boss, but who’s protecting you? Directors & Officers cover explained

Who doesn’t want to be the boss of their own company? The upsides are endless, not least of which is having the freedom to make all the decisions. However, with the title come all kinds of responsibilities and liabilities.

As the director/owner of a business you are personally held liable for your actions. This includes any omissions you make while performing your duties. The claims against you could include fines, penalties, compensation or even imprisonment. Therefore, ensuring that you have the right protection to cover yourself and your business is absolutely crucial.

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What’s the difference between Professional Indemnity and D&O insurance?

If you already have Professional Indemnity insurance you might ask whether you need a Directors & Officers (D&O) policy too. Understandably so. Many people often assume that the two are almost the same. Is this just another “insurance hack” to sell more products unnecessarily? No! Look closer and you will see the differences.

The main difference between Professional Indemnity insurance and D&O insurance:

  • D&O insurance provides financial support in the event that a claim is made against a senior member or director of your business and covers you for the costs associated with legal representation.  
  • Professional indemnity insurance provides protection for errors the business has made that have negatively affected their clients or customers. Particularly if you are an organisation providing work, consultation or advice.
As a business owner you are held responsible for the decisions you make

What type of claims does D&O insurance cover?

One of the key advantages of D&O cover is that it protects company leaders from litigious employees. This is in addition to covering claims from competitors, investors, vendors, and even customers. Some SME executives believe that their general liability or packaged business insurance policy will cover claims involving directors and officers. However, this is often not the case.

The claims may arise from an alleged or actual “wrongful” act. They include anything from harassment, unfair dismissal and discrimination to decisions or actions that have had a consequence and negative impact. Other common types of claims include actions by creditors, by business competitors and customers, and actions brought by regulatory bodies such as the Revenue.

Why is it worth considering D&O insurance?

It’s worth saying that views on whether or not you need D&O cover will vary. Some people will undoubtedly claim that if you are a small business you don’t necessarily need D&O. However, the reality is that no one is immune from risks and allegations, particularly in the increasingly litigious world that we live in today.

Without the appropriate D&O insurance you could personally be the subject of claims which could lead to financial devastation.  In the process this could also destroy your reputation as well as your business.

While D&O insurance has been growing in popularity among SMEs and is becoming a routine part of companies’ risk management process, there’s still a long way to go. It is important to consider every aspect of your business when you are thinking about insurance and protection. Ignore the importance of D&O insurance at your peril.

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Why choose Tapoly?

We recognise the risks and what’s at stake for you. Most importantly, we believe that protecting yourself and your business should not be an onerous or expensive exercise.

We are working hard to bring a broad range of useful insurance products to you. Our mission is to enable SMEs and freelancers to protect themselves at a fraction of the cost charged by traditional insurers. What’s more, recognising how busy you are, we want to do that within a matter of seconds. We also want you to have full flexibility. As much as we can, we don’t tie you down to annual contracts but allow you to choose how long you need cover for, whether that’s a few months, a few weeks or just a day. 

Find out more about Tapoly Directors & Officers insurance and how much it will cost you. You can also check our full list of products and prices.

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