Common situations where claims can occur

Each of these scenarios illustrate the difficulties that any business could face. Whether the situation is a criminal, civil or regulatory investigation, the need for adequate insurance protection is vital. The examples show the need for an insurance cover that is going to pay for appropriate expert legal defence and resultant awards and damages. Very often, regulatory investigations never progress into a civil or criminal action, yet the legal costs associated with such circumstances can be extremely costly.

Merger – A recently retired director is likely to be unaware that a third party was pursuing an action against the board for the actions of the directors whilst they were a board member. This is particularly pertinent when a company is sold and the purchaser subsequently alleges financial ‘misrepresentation’.

Health and safety – Being ‘held to account’ is an increasing fear for directors and officers, particularly in respect of corporate manslaughter cases where company directors are personally responsible for the safety of their customers and employees.

Abuse of position – most directors serving on the board will also be shareholders of the company. If they feel that their fellow board members have not acted correctly, they may be the source of a claim.