If a customer or another third party suffered financial loss, as a result of the actions of your company, they may try to sue the company to recover those losses. If however, the company successfully defends the claim, or no longer exists to defend it, it is possible that they could pursue a director (or former director) of that company personally to recover their losses. Directors and Officers (D&O) Liability Insurance would protect you against this type of claim.

Legal action against company directors does happen as a result of their business activity, and Directors and Officers Liability Insurance has been used to protect them against such action. These claims are rare, because the obvious first port of call is to pursue the company to recover the losses. However, if that proves unsuccessful, the owners, directors or senior managers of the business can be next in line.

Many people mistakenly think that working for a Limited Company gives them complete protection from personal legal action, but the reality is that claims do happen against directors. Although these claims are very rare, there is potential for the claims to be very severe. If a claim against you is successful, all of your assets are potentially at risk – even your home and savings.