Running a business can be exciting and challenging, but it comes with a degree of risk for the business owners, particularly as the business gets bigger.
Many people assume that by creating a limited company the business owners can avoid any personal liability attaching to them,however this isn't the case. A Director of a business can be made personally liable for the mismanagement of a business even if he orshe weren't aware of what has gone on.
You don't need to be the business owner or a shareholder to be found personally liable -just holding a Directorship (Executive or Non Executive) is sufficient to confer a perception of authority, enough for your personal assets to be at risk. For example, it is quite possible for an employed Finance Director to be held personally liable if it is felt he knew or should have known about a financial problem in the business and did nothing to correct it.
This liability extends to the estate of a deceased director if a business has been mismanaged.
A management risks policy can incorporate a number of different types of cover. They are normally based around directors and officers policy which is then extended to include cover for entity defence and employment practices liability.
Organisations and Associations might also have a policy which extends to include professional indemnity risks.
For further details please call 01825 745 410.