When setting up a company or business, it is important to make sure that the correct insurance has been arranged before you open the doors to the public.
There are a number of elements that need to be considered when arranging insurance for your business or company:
3rd Party Liability
This covers the business owner for any damage caused to the customer, because of negligence be it through injury or damage to their property or body injury
Professional Liability Insurance
This covers the business for any damages that may be caused as a result of professional negligence.
Business Contents Insurance
As with homeowner’s insurance, it is important to cover the contents of the business with adequate coverage should there be a loss as a result of fire damage, water damage, impact, storm and tempest, burglary, earthquake, natural disaster or vandalism. Business contents insurance covers the company’s equipment and inventory in the event of the aforementioned situations.
Employer’s Liability Insurance
This insurance covers the employer in the event of an injury to an employee as a result of a work related accident. This coverage can be based on the number of employees working at the company.
While many business owners rent their work space, there are many who decide to purchase the property as well. For those who purchase a property, it is important to insure the property with the correct structure insurance.
Directors and Officers Insurance
Directors and Officers Insurance is a policy that we recommend to all our clients who are setting up in business, particularly the small to medium size enterprises (SMEs) that often lack proper risk management infrastructure. Directors and Officers insurance can provide cover in the event of investigations, accusations of fraud, disqualification proceedings and other unanticipated problems that can arise. Many directors mistakenly believe that a good Legal Expenses policy will provide total cover when disputes are initiated. In fact those policies can be very limited, providing compensation only in the case of victory, without taking into account the costs involved in lengthy proceedings or the actions of former directors that may have strongly affected the case.
Actions against directors can be lengthy, costly, stress-inducing and often life changing. Knowing that you have cover in event of a complaint against yourself or your company can go some way in providing peace of mind.
Directors and Officers Insurance can provide cover for the following scenarios:
- Disqualification proceedings against directors can often go on for years, with significant costs involved and a ban placed on their ability to hold any directorial positions in the future. Directors and Officers Insurance will pay for the legal defense costs as they are incurred rather than at the conclusion of the case, thereby reducing the stress of raising funds as the proceedings are taking place.
Likewise, should an entire company be investigated, the Directors and Officers Insurance will cover legal costs from the instigation through to the conclusion of the court proceedings (unless a specific exclusion has been added to the policy).
- Directors may find themselves accused of acting dishonestly or fraudulently, or having acted without sufficient care for the best interests of the company. If dishonest acts are alleged, Directors and Officers insurance can cover defense costs, and in the case of lack of due diligence, awards could also be covered.
- Sometimes liability can affect the very liberty of the director- prison is not an unheard of end to these proceedings. Director and Officers Insurance cannot cover criminal penalties, however it can cover the costs of defending a claim up until a guilty verdict is established.
- In the case of SMEs, specialist Directors and Officers Insurance can cover the company (that due to its’ size, may not be able to fund a lengthy court case) as well as the individual director’s defense and employment tribunal costs, and the associated awards for covered claims.
- Directors and Officers Insurance is particularly recommended for partners who sit on the Board of more than one company and who are therefore exposed to scrutiny from more than one angle. The policy can cover the partner not only in the regular workplace, but also for the work on those other Boards. It can assist with the cost of tribunals and awards, as well as provide access to employment litigation specialists should the need arise.
- Working at the top level of a company exposes the directors to allegations from individuals or groups seeking to cause harm by embroiling them in litigation that can be unfounded, or not. The cost of these malicious lawsuits can also be covered by Directors and Officers Insurance.
- Investigations can also be initiated against directors who may have already left the company. These actions can follow the director to their next job, during retirement, or even in death as the directors’ estates can also be pursued. As long as the Directors and Officers insurance policy was in place at the time of the alleged incident, then the director would be covered for a period post retirement. If the director had resigned from the company, then they would be covered for as long as the company has maintained the policy, thereby protecting their assets for the long term.
As a director or officer of a business, it is imperative that the appropriate plan be implemented to cover all possible outcomes or liabilities, depending on the size, nature and areas of work. Please contact us for further clarification of these issues.
Please note that the terms and conditions are tailor made to the needs of our clients and will be provided to each company according to its features. Not all components mentioned above are available to every company.