Directors & Officers Liability Insurance (D & O)

The D&O policy provides cover for the personal liability of Directors and Officers, arising due to wrongful acts in their managerial capacity. D&O policy also provides coverage for defence costs which is payable in advance of final judgment. This policy protects claims brought against directors, officers and employees for actual or alleged breach of duty, neglect, misstatements or errors in their managerial capacity.

Key Benefits

• They protect directors, personally
• If someone sues the business, they might name certain directors. This might leave the directors open to personal losses. Therefore, their income, their family and their livelihood might come under threat. D&O coverage can consequently help them cover themselves should they have to make personal remittance to affected parties.
• It covers the business
• D&O insurance usually applies to multiple parties within the business. Therefore, by getting coverage, a business decreases its own personal financial risks. If a director can avoid personal financial losses, so can the business. Therefore, coverage can put both parties in a more stable financial position.
• It increases your corporate potential
• By getting D&O insurance, the business creates more security for itself. It might also increase its own reputation and abilities'
• When a company has D&O coverage, it creates protection for employees. Therefore, when looking to hire future directors, the existence of a policy might prove an incentive for employment. People might be more likely to work with a business if they know it will carry a D&O policy in their names. Coverage is so important that many prospective employees will ask for the business to buy coverage before they consider working for you
• At the end of the day, D&O insurance might prove one of your business's most significant benefits. It can help you attract and retain talent that can take your performance to the next level

Coverages

• Provides coverage to individual directors and officers when not indemnified by the organization as a result of state law or financial capability of the organization; however, exclusions may apply if an Organization refuses to pay the legal defence/loss of a director or officer, or if a bankruptcy court issues an order preventing such indemnification
• Provides coverage for the organization (organizations) when it indemnifies the directors and officers (corporate reimbursement)
• Provides coverage to the organization (organizations) itself for securities claims brought against it
  (NOTE: securities claim only coverage applies to publicly traded companies and large private companies; small private companies may be able to obtain broader "entity" coverage)
• D&O policies may also provide an additional clause, which provides for a sublimit for investigative costs coverage related to a shareholder derivative demand
• Against any loss that the organization may incur, on account of mistaken actions taken in their individual capacity as Directors & Officers in pursuance of their duties under Memorandum and Articles of Association
• Against loss arising from claims made against them by reason of any wrongful Act in their Official capacity
• Legal costs & expenses incurred with the written consent of the insurers arising out of prosecution (criminal or otherwise) of any Director/officer and attendance at any investigation, examination, inquiry or other proceedings by the authority empowered to do so
• Expenses incurred by any shareholder of the company in pursuance of a claim against any director/officer, which the company is legally obliged to pay, according to an order of a Court
• Provide indemnity to the estate of, legal heirs or legal representatives of the director/officer in the event of the director/officer becoming insolvent

Exclusions

• Intentional illegal acts, Dishonest, fraudulent, criminal or malicious act or illegal profits
• Any bodily injury, sickness, disease or death of any person or any damage to tangible property
• Personal guarantee
• Personal injury and damage to property
• Pollution damage or Pollution claims other than for shareholder derivative actions
• Directly resulting from goods or products manufacture or sold by the company
• Fines, penalties, or multiple damages
• Pending or prior litigation, demands or judgments
• Circumstances notified under a prior insurance policy
• Claims brought by one insured individual or the insured organization against another insured individual other than:
  • Derivative actions brought by shareholders or regulatory bodies
  • Employee related actions of wrongful termination, denial of natural justice and defamations relating to wrongful termination, discrimination or sexual harassment claims
  • Claims by an insured individual for contribution or indemnity
  • Defence costs incurred outside and not Subject to the procedural laws of the USA
  • Claims against the fiduciaries or administrators of any retirement or employee benefit plan
  • Breaches of insider trading legislation

Claim Process

In the event of loss, the following are immediate actions to be taken Intimate the insurer the occurrence of loss, submit a full statement in writing of the claim, provide the nature and extent of loss and also the estimate of loss. Any delay in intimation might jeopardize the claim as the insurer may express an inability in accepting liability of the loss/damage.

• To take all steps to reduce and minimize the extent of loss/damage and liability.
• Proximate cause of the loss and assess the type/extent and whether it is within the scope of the policy.
• To extend full co-operation to the insurer and the surveyor appointed for completion of the survey work and proper assessment of the loss.
• Produce all such records and proof as may be required by the surveyor or the insurer for arriving at the extent of loss and the liability under policy.
• Provide documents such as claim form, copy of the policy, demand letter, Incident note, etc.