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without it, your personal assets could be at risk!

Management Liability (Directors & Officers) Insurance – without it, your personal assets could be at risk!

July 2020

If you’re a director, or an officer, of a company you’ll have extra responsibilities to your employees, members of the public, investors and regulators. That can be rewarding, but it also means you could be more exposed to a range of risks if things go wrong and your personal assets (home, pension etc) could be at risk.

Directors and senior managers can be held personally liable for their actions and decisions, resulting in significant legal costs and in some cases, awards. Management Liability cover, also known as Directors & Officers Insurance, will provide legal defence costs as well as awards (potential payments to claimants).

How can liability arise?

Liability for Directors & Officers can arise under statute, including the Companies Act 2006 which specifically defined a director’s duties for the first time.

Personal liability can also arise under common law due to an individual’s duties to a company, through regulatory/disciplinary proceedings and investigations and when an individual acts on behalf of the company. Claims for incorrectly handling furlough, or redundancy processes leading to claims for unfair dismissal and breaches of Health and Safety rules are likely to increase as businesses adapt to new working practices.

For example, just think of the Health & Safety challenges all businesses are faced with due to the effects of Covid-19. We’re already hearing of an alarming number of organisations being established, looking at this as the new opportunity to seek compensation for customers! 

What does company directors and officers insurance cover do?

This policy is designed to offer protection for businesses and individuals as a result of claims relating to ‘wrongful acts’. A wrongful act can include breach of trust, breach of duty, neglect, error, misleading statements and wrongful trading. Without this cover, a director could be forced to fund a legal defence out of their own personal assets.

In these uncertain times, it’s never been as important to have the right protection for you and your family. We are already seeing the market contract with the number of insurers willing to provide cover reducing and prices rising, which we expect to only continue in the very near future. 

If you don’t already buy Management Liability cover then please contact us now to discuss. If you do already hold cover, perhaps now would be a good time to review the levels of covers you buy.

We urge you to get in touch with your usual Baxters contact to discuss your own circumstances. Alternatively please call 020 8554 5500 or email

We at Baxters are here to help and can offer support and advice in these uncertain times.