UA-79376727-1





Directors & officers liability insurance;

What is Directors & Officers Liability Insurance?

D&O insurance policies offer liability cover for company managers to protect them from claims which may arise from the decisions and actions taken within the scope of their regular duties.

Such policies cover the personal liability of company directors and officers as individuals (Side A cover), but also the reimbursement of the insured company in case it has paid the claim of a third party on behalf of its managers in order to protect them (Side B or Company Reimbursement Cover).

Why do you need Directors & Officers Liability Insurance?

Managers can make mistakes – and are often personally legally liable for them. They constantly walk a fine line, making tough and complex decisions with huge impacts on the basis of the sometimes limited information available. This increased complexity in the operating environment puts managers in the firing line.

What does Directors & Officers Liability Insurance cover?

The core purpose of a D&O policy is to provide financial protection for managers against the consequences of actual or alleged “wrongful acts” when acting in the scope of their managerial duties. The D&O policy will pay for:

  • Defense costs and financial losses.
  • In addition, extensions on many D&O policies also cover costs for managers generated by administrative and criminal proceedings or in the course of investigations by regulators or criminal prosecutors.

The most Common Directors & Officers liability risk scenarios include:

  • Employment practices & HR issues
  • Shareholder actions
  • Reporting errors
  • Inaccurate or inadequate disclosure (e.g. in company accounts)
  • Misrepresentation in a prospectus
  • Decisions exceeding the authority granted to a company officer
  • Failure to comply with regulations or laws

Who does Directors & Officers Liability Insurance cover?

All current, future and past directors and officers of a company and its subsidiaries are covered under a D&O policy, which can also include non-executive directors. In very specific cases like securities claims, the policy can even be extended to cover claims against the company itself. Cover is usually taken out and paid for by the company.