Opinion

Protect and survive

People are litigious, no more so than in times of crisis when things have a habit of going pear shaped.

Directors of companies are particularly in the firing line as shareholders and the authorities seek to examine the detail when something - a business for example - is in trouble or has failed.

Whilst the law prevents a company from offering protection to directors for matters such as negligence, default or breach of duty or trust, there are provisions that allow for some protection to be covered.

This is often provided in the form of Directors and Officers Indemnity Insurance. This insurance, in the case of a valid claim, will provide cover so that directors do not have to fund a defence from their own pocket.

Defence, by the way, can cover criminal proceedings to the point that someone has been found guilty but a policy cannot cover the fine.

There are a multitude of rules and caveats that relate to this form of insurance, and as many firms tend to buy policies that run from January to December, now is a good time to check the cover being sought and the protections offered.

Rather like car or home insurance, businesses may have to change insurer to get a deal that suits their situation best.

This was first published in November 2010

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