Legal insurance or protection for a specific scernario?

[EB89]

I think this is a daft question, but I want to check...I used to be a director for a very small company - Apx 80k turnover.

I am concerned that if any legal proceedings arose, or if I felt I needed to instigate legal proceedings myself. Is there an insurance or legal product that would protect me from this eventuality where the issue / point of inccorect decision or mistake?

I don't believe I have made a mistake, any wrongdoing etc. But wondering about the eventuality of someone raising a claim against me and myself having to cover my own costs for legal - particularly If I am correct.

[SydneyBridge]

Should be covered by any liability insurance you or the company have/had

[EB89]

SydneyBridge said:

Should be covered by any liability insurance you or the company have/had

Does this protect me even though I am no longer a director and the actions in question are historic?

Is there a scenerio where current directors of the company could legally persue me as an individual for any of my actions as a former director?

[Panamax]

Normal company liability insurances will not protect a director who has made mistakes. You would need specific "Directors and Officers Liability insurance" which protects the individual people running the show as well as the company itself.

It's a tricky area, particularly in the sense of whether a year's insurance just covers claims that were received during that calendar year or whether the insurance will cover a claim made in, say, 2026 relating to a decision that was made in 2022.

There is a thing called runoff insurance which can be helpful in this area. A runoff policy applies for a certain period after the policy is active acting as a claims-made policy rather than an occurrence policy.

An occurrence policy covers claims made for injuries sustained during the life of an insurance policy, even if they're filed after the policy is canceled. They are specifically to cover things that may cause injury of damage years after they occur, such as exposure to hazardous chemicals.

The bottom line is you need to talk to a good insurance broker.

[Simpo Two]

EB89 said:

I am concerned that if any legal proceedings arose, or if I felt I needed to instigate legal proceedings myself.

What would they be other than the usual 'You haven't paid my bill' type disputes? For that there is small claims, no insurance or solicitors needed.

[DaveA8]

EB89 said:

I think this is a daft question, but I want to check...I used to be a director for a very small company - Apx 80k turnover.

I am concerned that if any legal proceedings arose, or if I felt I needed to instigate legal proceedings myself. Is there an insurance or legal product that would protect me from this eventuality where the issue / point of inccorect decision or mistake?

I don't believe I have made a mistake, any wrongdoing etc. But wondering about the eventuality of someone raising a claim against me and myself having to cover my own costs for legal - particularly If I am correct.

If this is keeping you awake at night, you need proper specialist advice but if it's just a general concern, I have always viewed it this way. Since you are no longer a director, is there some thing that happened that now concerns you ?

If in the course of business, the company fails in some duty and is liable, the company is limited liability and the claim is against the company.
If the Director has done something that takes the veil of limited liability away, it is hard to see what insurer would be able to protect the director except in perhaps very limited narrow circumstances and I'd imagine directors liability insurance would have nice recovery clauses if the director was found liable.
It's like these Tax protection policies for companies, they can't and rightly so insure against a Tax liability but they can in limited circumstances help with costs of defending a claim but those ( as I found out are narrow and exclude a lot)
If you are in a specialist professional field such as Nuclear Engineering, I'd guess the best place to start is your professional body but if you are an online retailer, it's hard to think if you are running an honest business where a legitimate claim would come from.
I guess the devil is in the detail but from my limited experience, insurance against criminal acts isn't a thing

[Panamax]

DaveA8 said:

I guess the devil is in the detail but from my limited experience, insurance against criminal acts isn't a thing

Directors’ and officers’ liability insurance typically covers the cost of defending legal proceedings brought against the individual, as well as any compensation costs that arise from an unsuccessful defence. In other words, the cost of defending civil claims is generally covered whether or not that defence is successful.

Criminal defence costs are also likely to be covered under a D&O policy although actual fines and penalties usually aren't covered.

Most D&O policies exclude cover if there has been deliberate dishonesty of any kind. In other words the cover is for people who have been trying to do their jobs properly but may have fallen foul of the law along the way.

[DaveA8]

Panamax said:

DaveA8 said:

I guess the devil is in the detail but from my limited experience, insurance against criminal acts isn't a thing

Directors’ and officers’ liability insurance typically covers the cost of defending legal proceedings brought against the individual, as well as any compensation costs that arise from an unsuccessful defence. In other words, the cost of defending civil claims is generally covered whether or not that defence is successful.

Criminal defence costs are also likely to be covered under a D&O policy although actual fines and penalties usually aren't covered.

Most D&O policies exclude cover if there has been deliberate dishonesty of any kind. In other words the cover is for people who have been trying to do their jobs properly but may have fallen foul of the law along the way.

As I say, it's not something I've considered too much but I recall working for a very large building contractor who had heaps of policies and the brokers were always banging on about rights of subrogation particularly on Directors policies but again this was at a time when the insurance company, St George offered drink drive policies, one otherwise intelligent director took this as it was acceptable to drink drive and had convinced himself that because of the insurance he couldn't be banned.

[SydneyBridge]

I work for a large firm of Solicitors, they have insurance for my negligence, but the excess is huge (at least £10k). The firm would therefore pay for anything less than that. An act of negligance could have occured 2,3 or 4 years ago and only come to light now.