In today’s increasingly litigious society, being a company director could be regarded as a high-risk occupation, given the set of duties and responsibilities that come with the role. If it is believed the director has breached these or has failed to safeguard the interests of a variety of stakeholders, they can find themselves in court facing legal action.
This can have serious financial implications for a director, potentially putting their own assets, including their home, car and savings, at risk.
Among the costs they could find themselves having to meet are the legal expenses of defending a claim, awards for damages and regulatory fines.
A claim doesn’t even have to reach court for a director to find him or herself out of pocket. Where a regulator or a body such as the Health & Safety Executive or HM Revenue & Customs suspects a failing within a company, it can launch an investigation. This can be costly and time consuming.
As well as the financial risks, directors also face significant reputational damage. Being found in breach of their duties will affect their career and could also mean they risk being disqualified from holding the position of director. Disqualification can prevent them from being a company director - or even being involved in setting up, running or marketing a company - for up to 15 years.
Employment Practices Liability: the insurance cover provides protection in respect of legal costs and expenses, as well as court awards for a wide range of employment practice violations. It also covers questionable or unfounded allegations which can be just as costly to defend.