Directors’ & Officers’ (D&O) liability insurance provides protection for senior management in the event that they are the subject of a claim or investigation arising from the performance of their duties at their company. For the directors, a policy provides personal asset protection should the employer's indemnification fail for any reason. For the company, a policy provides balance sheet protection where the company has indemnified its directors or, where purchased, in respect to securities claims.
Yet how many directors really know what “good” looks like when it comes to D&O insurance? Are they able to understand who is typically covered, who they share that cover with, what is covered and what is not covered and what happens when they leave the organisation? We aim to impart this knowledge whilst seeking to deliver the most appropriate and tailored coverage solutions and best in class liability protections.
Why you should consider buying this insurance
Any director may face a wide range of claims relating to their day-to-day management of the company. In today's difficult environment, claims can arise from a variety of sources:
- The company – in most jurisdictions directors owe their primary duty of care to their company and may therefore face claims brought against them by the company.
- Security holders (shareholders and bondholders) – worldwide securities laws usually provide causes of action for shareholders to pursue directors and/or the company where they have suffered a financial loss in connection with the sale or purchase of the company’s securities.
- Regulators / Government Bodies – in most jurisdictions regulators are usually given powers to investigate companies and their directors and hand down fines and penalties.
- Employees – in most jurisdictions, employees have the right to bring claims against directors for employment-practices related acts and omissions such as unfair dismissal, harassment and discrimination.
- Liquidators – in the event of insolvency proceedings such as liquidation of the company, the insolvency practitioner (for example the liquidator) can bring a claim on behalf of the company for any breach of duty by the directors.