Directors and Officers Liability Insurance will cover any civil or criminal offences, including any legal defence costs and awards. In addition, not only is cover available for all directors and officers of the company but it also extends to include managers and key employees. You will be aware that current law states that if an individual of a company is sued directly then, in some circumstances, he or she is forbidden from having the defence costs or claim awards paid by the company.

To summarise, without Directors & Officers Liability Insurance, directors' homes and personal possessions are at risk.

The Companies Act contains seven statutory duties of directors:

• • A duty to exercise reasonable care, skill and diligence
• • A duty to promote the success of the company
• • A duty to act within powers
• • A duty to exercise independent judgment
• • A duty to avoid conflicts of interest
• • A duty not to accept benefits from third parties
• • A duty to declare any interest in a proposed transaction or arrangement

Directors & Officers Liability Insurance is designed to cover Private Companies domiciled in the UK, Non-profit organisations in the UK and Resident's Management Companies.

The cover will include key areas such as:

• • Financial mismanagement
• • Breaches of Company Law
• • Breaches of Tax Law
• • Employment issues
• • Breaches of Environmental Law

Personal Liability

A common misconception is that directors of limited liability companies can hide behind the veil of incorporation. This is not the case - directors' personal liabilities are unlimited and in the course of carrying out everyday duties for a company, directors are exposing themselves personally to lawsuits, investigations and criminal prosecutions.

Criminal Liability

Directors could go to prison for their actions, inaction or ignorance.

Investigations

Since 1993, actions against directors by the Department of Trade and Industry (DTI) have increased by over 400% - with an increasing focus on smaller businesses. Even when there is no initial allegation that a director has done wrong, having the funds to obtain legal representation enables directors to gain the best possible outcome.

Director Disqualification

A total of 1200 directors were disqualified in the year to March 2007. Disqualification stops directors working in any management job with orders ranging from 2 to 15 years. But the problems don't end there, even after the ban credit histories and personal reputations can be permanently damaged.