Insurance guide for directors

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, professional services you have provided 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 a claim for financial loss. Professional indemnity insurance can help you to focus on maximising the success of your businesses – knowing you have the support of a policy designed to provide cover for defence costs and indemnity payments, in the event that a claim was brought against your business for its professional services.

Who can benefit from professional indemnity insurance?

• Individuals and businesses of all sizes that provide advice, designs or professional services
• Businesses with an approved business activity
• A range of professions such as:
  • Accountancy
  • Business and management consultants
  • IT consultants, suppliers and software developers
  • Marketing and media companies
  • Recruitment consultants
  • Estate and letting agents
  • Engineers
  • Graphic designers
  • Web designers
  • Interior designers
  • Event organisers
  • Health and Safety consultants
  • Training providers, and many more

How the IoD can help

Professional indemnity insurance, provided by Hiscox, is bought by an individual or a company to provide cover for claims made against them for their professional services. The industry-specific policies can suit many of the risks you face in your 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. Terms and conditions apply. Subject to underwriting criteria.

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 serving, and acting, in their capacity as a director or officer of the company (ie running the business). This cover helps with both the costs of defending against these types of claims, and with losses suffered because of them.

Equally, and whilst you may not be involved in the actual day to day running of your business and have insight on every decision that is being made on behalf of the business, having directors’ and officers’ insurance can help protect you and your personal assets against unseen risks or the unexpected mistakes that can occur.

Again, a directors’ and officers’ policy can give you peace of mind while providing you with protection from personal or financial loss arising from these types of claims.

What type of allegations are typically covered?

• Breaches of duty, care and trust
• Negligent acts, errors, misstatements or omissions
• Defamation
• Investigations such as health and safety failures and pollution

Who can benefit from directors’ and officers’ insurance?

• Individuals in positions of leadership within an organisation, for example;
  • Directors
  • Partners
  • Officers
  • General Managers

How the IoD can help

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. Terms and conditions apply. Subject to underwriting criteria.

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 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 advice, this may be covered by directors’ and officers’ insurance.