Directors & Officers Liability Insurance
Actions against directors and professionals can seriously damage a company and irreparably damage an individual’s own career. Even unfounded allegations can be extremely stressful, expensive and time consuming to defend.
The Directors’ and Officers’ liability insurance policy (or D&O policy) protects both the insured company, and its directors and officers. The company’s shareholders, employees, customers and creditors are among the possible third party claimants.
D&O insurance covers liability of a company’s directors and officers and, normally, that of the company as well, to pay damages in respect of “wrongful acts”, which may be defined in the policy to include:
- breach of duty
- breach of trust
- breach of warranty of authority
- misstatement and misleading statement.
Some D&O policies extend cover, so that the term “insured” to include all employees of the company for the purposes of claims relating to:
- harassment, discrimination, or
- wrongful termination of employment.
The policy also covers legal expenses, of both the insured in defending or resisting third party claims and the successful third party.
The policy is usually subject to an aggregate limit of liability applicable to all claims made within the insurance period, which limit is either inclusive or exclusive of the insured legal expenses.
D&O insurance is written on a claims-made basis. Therefore individual directors will need to consider how cover can be maintained for them after they leave the company. Besides, consideration will have to be given to the extent to which cover should be maintained if a company ceases trading or is dissolved or taken over.
Some insurers automatically grant retroactive cover for the period for which D&O insurance has been held, excluding claims and circumstances notified under previous insurance policies, prior or pending litigation, and matters involving substantially the same facts as such prior or pending litigation.
Below are some of the insurers that provide Directors and Officers cover, along with their relevant documents.
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