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Directors and Officers Liability Insurance cover protects the company’s directors and officers against claims arising from their decisions and actions taken whilst fulfilling the roll. The duties of a director have been established through statutes, regulations and case law and can be broken down into the following areas:
Duty of Care and Skill
This is a common law duty that requires Directors to act with ‘the care an ordinary man would take in the same circumstances on his own behalf’ and with the skill expected from someone with his ‘particular knowledge and experience’. Where duties are delegated the Director is responsible for ensuring that the person to whom the duties are delegated is sufficiently experienced, reliable and honest.
Fiduciary Duty
Directors must act honestly, in good faith and in the best interest of the company and must ensure that he does not have any conflict of interest.
Statutory Duty
There are many statutes that affect the conduct of Directors and Officers including the Companies Act 1985, Insolvency Act 1986, Financial Services Act 1986, Environmental Protection Act 1990, Health and Safety at Work Act 1974, to name but a few.
If a Director is perceived to have failed in any of his duties then a claim could come from any one of a number of third parties including: Shareholders; Creditors; Government and Regulatory bodies; Employees and Visitors to the building.
The fact that you are not paid for this roll has no effect. In a claim situation the Director’s personal assets are at risk. The Directors and Officers Liability Insurance Policy will pay on behalf of the Director his legal costs and expenses and any civil damages awarded against him.
We have teamed up with Zurich a leading UK insurance company who has developed a Directors & Officers insurance policy specifically for Resident Management Companies.
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