Directors & Officers Insurance (or D&O) can provide the directors, officers and decision makers of a company with essential support, protecting them and their personal assets if they come under fire from employees, shareholders, regulatory bodies or members of the public. But what does this actually mean, and how does D&O work in action? Here are a few examples of situations where D&O could provide directors with an all-important lifeline.
Employment dispute proves costly
The directors and officers of one company sued those of another after three employees left their employ to work for their rival. The company alleged that the former employees were still working for them when they began sharing sensitive proprietary information with their competitor and took legal action, charging them with theft of trade secrets. After over a year of legal proceedings, the rival company agreed to pay out £106,000 as a settlement. In addition to this payout, they also accrued legal costs of £236,000, all of which could be covered by a D&O policy.
Sexual harassment claims lead to double lawsuit
When an employee complained to the executive director of her company that her manager had been sexually harassing her, he assured her he would look into it but never did due to a busy workload. After a written complaint still yielded no action, the employee quit and sued her former executive director for allowing sexual harassment in the workplace and failing to investigate her claims in a timely manner, arguing that she was constructively terminated. Following this, the executive director finally looked into her claims and determined they were true, firing the manager responsible. This resulted in yet another lawsuit for the executive director as the former manager sued for wrongful termination, alleging that his supposedly unacceptable behaviour had been tolerated for many years and that he had received no warning that others had found it inappropriate. In both cases, D&O Insurance could have covered the associated legal expenses and settlements.
Fatal accident costs trustees
A groundskeeper of an estate, hired to provide temporary cover while the regular one was on sick leave, suffered a fatal accident which using an All Terrain Vehicle to traverse the grounds. The vehicle flipped and the groundskeeper suffered deep wounds. He lived long enough to pull himself free from the wreckage and attempt to reach a nearby barn to call for help before finally succumbing to his injuries. He had not been provided with a mobile phone or walkie-talkie to ask for assistance and his shift had not been accurately recorded, meaning it was hours until the accident was discovered. Because of this, the HSE fined the trustees of the estate £3,000 for breaching Health and Safety regulations and causing a preventable death, something which D&O Insurance could have covered them against.
If you’d like to find out more about Directors & Officers Insurance, and how it could protect you, simply get in touch with the team at Hinks Insurance and we’ll be more than happy to help you.