Insurance experts are warning thousands of company directors to ensure they have adequate insurance to protect them from increasing claims.
According to the experts, many company heads are unaware of the personal liability they face and are exposing themselves personally to lawsuits, investigations and criminal prosecutions.
Robert Cholmondeley, director of Taylor Patterson Insurance Services, said: “27% of the UK's SME directors don't know if they have insurance to protect them from being personally culpable in the event of being sued."
The Companies Act 2004 resulted in companies being allowed to indemnify directors for legal costs, awards and settlements for acts of a civil nature even if allegations were proven. However, personal liability still exists for directors.
Cholmondeley added: “Insurance protection in the form of a directors' and officers' liability policy will offset the risk to both a company's balance sheet in the case of indemnity to a director and the personal assets of a director."
