Insurance guide for directors
Whilst carrying out your duties as a director, you may face a number of risks for which you can get protection by having the right insurance in place. It can be tricky to know which cover suits you and your business best, but the IoD is here to help. The information below summarises the types of cover on offer but should you require more information, do not hesitate to make contact with our carefully selected insurance providers.
Professional indemnity insurance
Professional indemnity insurance can help protect you if claims are brought against you by a client due to a problem with, or resulting from, work you have done for them. This insurance can be particularly useful for businesses who provide advice or instructions as part of their service. The policy includes cover for negligence, infringement of intellectual property, breach of confidence and defamation.
You may feel confident in the quality of your work, but any small business is vulnerable to a claim of negligence when professional advice or services fail to meet a client’s expectations, which could lead to financial loss. Professional indemnity insurance can allow you to do your job free of the fear of potential legal fees being brought your way as a result of a claim.
Who can benefit from professional indemnity insurance?
- Individuals and companies of all sizes that provide an advisory service
- Businesses with an approved business activity
- A range of professions such as:
- Business & management consultants
- IT consultants, suppliers & software developers
- Marketing and media companies
- Recruitment consultants
- Estate & letting agents
- Graphic designers
- Web designers, and many more
How the IoD can help
IoD professional indemnity insurance, provided by Hiscox, is bought by an individual or a company. The industry-specific policies can suit many of the risks you face in your particular industry and are available to a range of professions. To learn more about Hiscox’s professional indemnity insurance and to receive a member discount, click here.
Directors’ and officers’ insurance
Directors’ and officers’ insurance – also known as management liability insurance – can help protect company leaders, should they be accused of wrongful acts while they are running the business. This cover helps with both the costs of defending against these types of claims, and with losses suffered as a consequence of them.
When you are the director of a business or organisation you may not be involved in the day to day running of your business and have insight on every decision that is being made that could impact your clients – having directors’ and officers’ insurance does not therefore mean you are expecting mistakes to be made, but can protect you and your personal assets against unseen risks. This can allow you to run your business without the concern of personal or financial loss from these types of claims.
What is covered?
- Breach of duty of care
- Breach of trust
- Negligent errors
- Health and safety failures
- Causing pollution
- Mismanagement of pension schemes
Who can benefit from directors’ and officers’ insurance?
- Individuals in positions of leadership within an organisation, for example;
- General Managers
How the IoD can help
IoD directors’ and officers’ insurance, provided by Hiscox, is broken into three distinct product lines, with each protecting against a different range of risks that senior leadership employees may encounter. To learn more about Hiscox’s Directors’ and officers’ insurance and to receive a member discount, click here.
Professional indemnity insurance vs. Directors’ and officers’ insurance
The difference between professional indemnity insurance and directors’ and officers’ insurance, lies in who they protect and who any claim is brought against. The former protects your business and its assets if claims of negligence are brought against the business for any work you have done for your clients, whereas the latter protects you as a director and your personal assets from claims of mismanagement or mistakes made in the running or management of the business.
For example, if a consultant in your business gave financial advice which resulted in a financial loss for the client, this would be covered by professional indemnity insurance. Furthermore, if the board of directors then has legal action brought against them for hiring the consultant who gave the financial advice, this would be covered by directors and officers insurance.