Entity defence is another misunderstood policy cover. It provides protection for the business where an action is brought against the company rather than an individual. In these circumstances standard D&O policies would not pay the claim. Entity Defence cover is often sold as an additional option to Directors and Officers policies. Alternatively, it might be provided as an extension to an Employment Practices policy. Entity Defence provides cover for the ‘Entity’ (the Company) in respect of specific situations which arise in the United Kingdom. The policy covers the Entity’s legal costs and expenses in defending such claims.
Typical situations where Entity defence cover would be relevant would include:
Identity Fraud in establishing that someone has fraudulently entered into an agreement with a third party by representing themselves as the entity.
Corporate Manslaughter in defending a prosecution brought under the Corporate Manslaughter and Corporate Homicide Act
Breach of Contract Investigations in defending a claim which alleges breach of contract for goods or services provided.
Pollution in defence of an allegation that a director, officer or employee has committed a wrongful act which results in pollution.
Regulatory – Health and Safety and the like.
Cover can be extended to include the costs of using a public relations specialist to deal with adverse press, publicity or media attention within the United Kingdom. This would normally be used to manage the media in the event of allegations of fraud, serious injury to employees or members of the public, dismissal or resignation of members of the main board of directors, or official investigations into the entity’s affairs.