Without the protection of a Directors & Officers (D&O) policy, costs may have to be incurred by either the individual or the company. These are all scenarios of where the company did not have D&O insurance in place and highlights the consequences of not having the appropriate cover.
February 19, 2016
The responsibilities of company directors and senior staff have increased vastly through legislation during the last decade. The following examples will give you an idea of the types of issues that have arisen lately:
D&O Claims Examples
Employee Death in the Construction of a New Stadium
A fatal accident on-site led to an investigation by the police and the Health & Safety Executive. Charges of manslaughter and Health & Safety breaches were made against the company and its directors.
– Costs in the case were more than £150,000.
Action Against Frozen Food Manufacturer
The Food Standards authority took action against a frozen food manufacturer alleging that unsafe practices at their plant had allowed toxic to dye to contaminate a number of the products.
– The legal costs of the case were more than £35,000.
A former employee of a playing card manufacturer claimed that she been the victim of continuous racial harassment by her supervisor and that the company had ignored her complaints forcing her to resign.
– She was awarded £36,000.
Transfer of Employees
A number of employees in a recently acquired land surveying company made a claim against their new employer, alleging that their contracts had been unfairly changed.
– The claim was finally settled with the company having to paying more than £20,000 in legal fees.
After an employee was made redundant, they appealed the decision, alleging unfair dismissal on the basis of sexual discrimination. The company eventually reached a compromise agreement with the former employee.
– The claimant was rewarded £8,000 with the company having to pay high defence costs.
A director of a roofing contractor resigned after a board room dispute. He then made a claim alleging the other directors had acted unfairly in seeking new investment.
– After a lengthy legal battle, a small settlement was reached but legal fees were more than £100,000.
Theft by Branch Manager
A fancy goods manufacturer was the victim of lengthy fraud carried out by their former finance director. After investigation, it was found that this had been going on for 18 months.
– It was revealed that he stole more than £72,000 over an 18 month period.