Shared culpability is how the legal system views directors and officers of an organisation – even non-executive directors can be held liable for the actions of other directors… Which means you could end up fighting a court battle over something your colleague did, even if you didn’t know.
One for all and all for one – or ‘jointly and severally liable’, to use the legal term.
The last few years have seen a rise in claims on Directors’ and Officers’ policies, due to more stringent governance guidelines and increased oversight by regulators.
D&O liability insurance gives financial protection in the event you are sued personally. D&O protects you against claims made against you or your co-directors within the scope of your everyday business. It is there to cover you for legal costs as well as any damages.
D&O insurance is there to pay for costs relating to mounting a defence, and any damages or settlements relating to the matter. Any allegation made by a third party against a director or officer, no matter how frivolous, needs to be vigorously defended, otherwise there is a risk of judgement being entered in default of a defence.
Directors and officers can be held liable for their own actions and inactions – and the actions of their co-directors. Directors’ personal liability for the performance of a company is unlimited. If the shareholders want to sue for mismanagement, they can, and do, quite frequently.
According to claims figures from a leading D&O insurer, you need to worry about:
