D&O insurance explained

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.

5 key insurance issues

– Increased corporate governance means more D&O exposures

– D&O insurance covers claims resulting from managerial decisions that have adverse consequences

– D&O insurance is a complex cover requiring attention to what is and isn’t covered

– Common risk scenarios include failure to comply with regulation or laws, reporting errors or misrepresentation. Common exclusions include fraud, intentional non-compliant acts and property damage

– International insurance programmes necessary for companies with global subsidiaries and offices

What is D&O 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. As such, D&O insurance has become a regular part of companies’ risk management.

Companies purchase D&O cover because managers can make mistakes. D&O coverage includes financial protection for managers against the consequences of actual or alleged “wrongful acts”. Policies cover the personal liability of company directors 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.

Coverage is usually for current, future and past directors and officers of a company and its subsidiaries. D&O insurance grants cover on a claims-made basis. This means that claims are only covered if they are made while the policy is in effect or within a contractually agreed extended reporting period, which can extend up to another 72 months or even longer in some countries.

Coverage does not include fraudulent, criminal or intentional non-compliant acts or cases where directors obtained illegal remuneration, or acted for personal profit.

Therefore, D&O insurance raises many important questions which companies must face: How much is enough? What and who is covered – and not covered? Should small-to-medium sized enterprises (SME) purchase D&O? What does the typical program look like? How can risk management protect officers from the many perils they face in today’s business environment?

Click here to visit our Directors and Officers website

Who is covered?

– Past, present and future directors

– Non-executive directors

– Employees in a managerial or supervisory capacity

What is covered?

– Allegation of a wrongful act

– Costs and expenses of an insured e.g. defence costs

– Financial losses where the insured is held liable

Who is covered?

– Stockholders, investors, creditors, banks

– Supervisory board

– The company itself, employees

– Regulators, state authorities, unions

– Customers, suppliers, competitors

Any questions? Please don’t hesitate to contact one of our team.

Matthew.collins@ascendbrokingold.co.uk  |  Office: 01245 449 061