Directors and Officers Liability
Directors and officers liability insurance – often called D&O – is insurance that is payable to the directors and officers of a company, or to the organisation itself for losses or legal action that has been taken against them brought for alleged wrongful acts in their capacity as directors and officers.
This might include cost coverage for defence costs that are incurred from criminal and regulatory investigations. It is often the case that civil and criminal actions are brought against directors/officers simultaneously.
It should be noted that intentional illegal acts are typically not covered under a D&O policy.
Why you should consider it.
We strongly recommend that organisations that have director or officer roles, should consider D&O insurance.
With so much governance and regulatory surveillance in place today, company directors and officers are under increasing pressure to carry out their duties and obligations to the letter of the law. When they don’t, it can lead to personal liability for the individual director or for the entire board of directors.
What does it cover?
Directors and officers (D&O) liability insurance can protects the personal assets of corporate directors and officers and their spouses in the event they are personally sued by employees, vendors, competitors, investors, customers, or other parties, for actual or alleged wrongful acts in managing a company.
The insurance which usually protects the company as well, covers legal fees, settlements, and other costs. D&O insurance is the financial backing for a standard indemnification which holds directors and officers harmless for losses due to their role in the company.
It is important to note that many officers and directors will want a company to provide both indemnification and D&O insurance.
What isn’t covered?
As with any insurance there are limits to coverage. Generally, D&O policies have dollar-amount limits as to the various claims insured. This may involve an aggregate limit for all claims under the policy (i.e., the maximum amount the insurer has to pay under the policy) and sub-limits for particular types of claims.
Please talk to us about what may or may not be appropriate for your coverage.