DMI Ltd Case Highlights Requirement For Directors & Officers Insurance

In a case before the North Tyneside magistrates court on 21st September, DMI (UK) Ltd were found guilty of breaching section 2(1) of the Health and Safety at Work Act 1974 for failing to provide a safe system of work. The case related to serious burns suffered by their employee, Michael Reid, who was drenched with corrosive sodium hydroxide when a hose attached to the barrel of chemical became loose. Inadequate training and lack of appropriate risk assessments were found to be a contributing factor. The company has taken immediate action following the incident to rewrite company procedures and provide suitable personal protective equipment (PPE).

How Could Directors And Officers Insurance Have Helped?

It is not known whether DMI (UK) Ltd had D&O Insurance in place but had they arranged this type of insurance the directors would have been covered for legal representation costs for both the initial HSE investigation (ie prior to any court proceedings) and also during the court proceedings themselves. With the legal costs likely to have entered the thousands, such cover would have been extremely valuable to the company.

The key element here is that protection could have been available to the directors should the HSE have proceeded against them individually. If the action was against the company, cover could have fallen under either their Employers Liability insurance or under a corporate extension to a Directors and Officers insurance policy.

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