Insurance Information
Together, Practical HR and Lorica Insurance Brokers can help you mitigate the risks to your business.
As a Director you are responsible for the management decisions you make. Claims can then be brought against you for any alleged ‘wrongful acts'. Additionally, with Employment Tribunal awards, costs and settlements continuing to rise and employment legislation constantly changing, employment disputes can be complex, time consuming and expensive.
Whilst good corporate governance helps mitigate the risks associated with running a business, it does not eliminate them. In addition, most Directors incorrectly believe that they are protected by the limited liability status of their Company. However, as an individual you are exposed to potentially unlimited personal liabilities arising from actions brought by a number of potential claimants, as shown above.
- Directors do NOT have limited personal liability - your personal assets are at risk
- Your Company cannot indemnify you if it has gone into liquidation or administration.
- Legislation and Regulations apply to ALL Companies, whether large or small.
- Non Directors can be liable too
What is Directors and Officers Liability Insurance?
Directors & Officers Liability Insurance cover protects Companies' Directors, Officers and senior Managers against claims arising from their decisions and actions taken whilst managing their business. It also indemnifies the individual in respect of compensation awards he or she is legally liable to pay.
Why Buy Directors and Officers Liability Insurance?
In a claim situation the Director's personal assets are at risk. Directors cannot rely on their Company indemnifying them. Such an Indemnity from the Company may be in contravention of the Companies Act. Regardless of the stipulations of the Companies Act in the event of insolvency there will be no prospect of the Company indemnifying the Directors and Officers.
The Directors & Officers liability insurance Policy will pay on behalf of the Director, his/her legal costs and expenses and any civil damages awarded against them.
Extended cover for Employment Practices Liability (EPL)
Employees are increasingly aware of their rights and Companies need to ensure their procedures are up to date with legislation to avoid disputes and the significant expense of defending claims. With Employment Tribunal awards, costs and settlements continuing to rise and employment legislation constantly changing, staffing issues can be complex, time consuming and expensive.
EPL provides extended cover to your D & O insurance and gives protection in respect of legal costs and expenses, as well as tribunal awards for a wider range of areas including:
- Unfair or wrong dismissals
- Discrimination
- TUPE
- Wrongful dismissal or claims for breach of contract
Employment disputes cost organisations an enormous amount in management, time and defence costs.
Practical HR
To qualify for cover you must have in place up to date contracts of employment and relevant employment policy documents. If you have a Practical HR website ‘Your HR Services' you will qualify for cover as this ensures you are compliant and up to date. You may also qualify if you have up to date contracts of employment and policies (but not via the HR website)
Typical Claims Scenarios covered by an EPL Policy:
- A Company had to compensate a female employee after they failed to agree flexible working hours on her return from maternity leave. The employee believed that she had a verbal agreement to work part-time but the employer claimed that they had only suggested possible alternative arrangements that may be available. The employee received over £4,000 in compensation plus costs.
- A warehouse employee was awarded compensation after an Employment Tribunal found that he had been the subject of racist taunts, threats and abuse by colleagues over four years. Although the employer had initially been made aware of the situation it was found that they did not take adequate steps to deal with it. Consequently the employee was awarded over £45,000 in compensation.
How to get cover?
For more information or to request a quotation please complete the form below.
