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Directors liability insurance?

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    Directors liability insurance?

    I've heard mention of Directors liability insurance. Do people generally have this as well as Professional Indemnity insurance as I guess most contractors are directors of the own ltd companies? Whats it for?

    #2
    Directors Liability Insurance

    I believe this type of insurance is taken out by Directors of a company to protect themselves in case they get sued for the way they have run the company. The people doing the sueing are normally the other shareholders of the company who believe the Directors have run the company poorly and are liable for any problems the company may have.

    Comment


      #3
      Re: Directors Liability Insurance

      For example it may come in very handy if I took it out and Mrs. Fiddle sued me for wastintg money on it.

      If you are running Ltd. the only compulsary insurance is Employers Liability.

      Your client or agent may insist on Professional Indemnity (or you may decide it's good for your own peace of mind)

      After that there are a raft of others - Tax Investigation Guaranteed Income (can't remember the proper name) etc. etc.

      Remember - insurances are often sold on a commission basis. It is nice to have enough money left over to buy food.

      Comment


        #4
        Insurance

        "If you are running Ltd. the only compulsary insurance is Employers Liability"

        I don't think it is compulsory. I've never had it in my 17 years of contracting through a limited company, nor have any contractor colleagues to my knowledge.

        Don't believe accountants who claim it is compulsory. They may get commission if they sell it to you.

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          #5
          Compulsory insurance

          There is obviously a difference between what insurances are wise to have and what insurances are, by law, compulsory. On the narrow question of what insurances are compulsory, employer’s liability insurance is not compulsory for all companies but only those companies which have employees in the strict sense of persons employed under a contract of service.

          S1(1) of the Employers’ Liability (Compulsory Insurance) Act 1969 provides:

          “Except as otherwise provided by this Act, every employer carrying on any business in Great Britain shall insure, and maintain insurance, under one or more approved policies with an authorised insurer or insurers against liability for bodily injury or disease sustained by his employees, and arising out of and in the course of their employment in Great Britain in that business, but except in so far as regulations otherwise provide not including injury or disease suffered or contracted outside Great Britain.”

          And S2(1) provides:

          “For the purposes of this Act the term “employee” means an individual who has entered into or works under a contract of service or apprenticeship with an employer whether by way of manual labour, clerical work or otherwise, whether such contract is expressed or implied, oral or in writing.”

          All limited companies have to have a company secretary and at least one director but being a company secretary or a director does not automatically mean that you have a contract of service with your company. Many directors and company secretary’s do of course but it is not inevitable.

          So in the case of a limited company where there is no contract of service (express or implied) with the directors or company secretary and which does not employ anyone else, employer’s liability insurance is not compulsory.

          Comment


            #6
            so ...

            So in the case of a limited company where there is no contract of service (express or implied) with the directors or company secretary and which does not employ anyone else, employer’s liability insurance is not compulsory.
            In a typical contractor company - one partner does the contracting and the other does the co-sec job with no formal written contract of employment what are the chances of ther not being an implied contract of service?

            I know there is an exclusion for "family businesses" but that concession goes for incorporated family businesses.

            I'll come clean here - I don't have it because it is a clear waste of money but I thought that I should.

            Comment


              #7
              Employer's liability insurance

              In a typical contractor company - one partner does the contracting and the other does the co-sec job with no formal written contract of employment what are the chances of ther not being an implied contract of service?
              I don't want to comment on individual cases on this board but as a general point there are ways of insuring that no implied contract arises e.g. by having a written agreement declaring that no contract exists.

              Of course if no contract exist than other non-contractual arrangements for remuneration will need to be made in accordance with the Articles of Association.

              Another possibility, if avoidance of a contract of service is desired for any reason, is to have a written contract which is stated to be a contract for services but this will not work in all cases because, as you will appreciate, if a contract exists whether it is a contract of service or a contract for services is not solely determined by the label the parties place on it.

              John Antell

              www.john.antell.name

              Comment


                #8
                "non-contractual arrangements for remuneration"

                non-contractual arrangements for remuneration
                Examples please?

                Comment


                  #9
                  Re: "non-contractual arrangements for remuneration&quot

                  Thanks.

                  > contract for services

                  I love this one - if I simply produced name change clones of my agency contract which I believe (hope?) is a contract for services do I then run the risk of some agency deciding I'm an employee of my own company and so in need of EL?

                  Hector would have some fun then arguing that the exact same work also made me an employee of the end user.

                  Brilliant - just shows again what a tangled minefield (lawyers and hangers-on gravy train?) IR35 really is.

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