Directors & Officers

D&O insurance (abbreviation for Directors and Officers Liability Insurance) is liability insurance payable to the directors and officers of a company. It provides financial assistance to fund the defence costs of company directors or senior managers for a claim made against them about alleged mismanagement.

D&O insurance can cover the directors and officers from the following risk scenarios :

• Employment practices and HR issues.
• Shareholder actions.
• Reporting errors such as Company Account.
• Breach of fiduciary duty resulting in financial losses or bankruptcy.
• False representation of a company’s assets.
• The embezzlement of a company’s fund.
• Theft of intellectual property and poaching of competitor’s customers.
• Lack of corporate governance.
• Failure to comply with the workplace regulation or laws.
• Corporate manslaughter.
• Insolvencies.
• Creditor claims.
• Competitor claims.
• Claims made by the company itself are also at risk

Anyone who serves in a leadership position in business and organization of any size can get valuable protection from D&O liability insurance.

So, whether you are a small business, an NPO, or a multinational corporation, D&O insurance protects your directors and officers. It covers them against legal costs and financial loss that can impact the employees’ personal assets and careers.

The following positions should strongly consider getting coverage from D&O insurance to hedge their risks:

1. Past, present, and future directors.
2. Directors in a non-executive position.
3. Employees in a management position.
4. Stockholders, investors, creditors, and banks may consider this insurance.

D&O liability insurance provides coverage across a wide range of issues however, it is not limitless and doesn't protect against illegal acts. The following are some of the exclusions of D&O insurance: 

• Illegal act
• Illegal profit
• Property damage and personal injury
• Legal action already taken at the beginning of the police
• Claims made under a previous policy
• Claims covered by other insurance

The main difference between both insurance policies is the capacity in which the wrongful act, which results in a lawsuit, is done.

Professional Indemnity insurance is designed to protect mistakes made by a business, negatively impacting its clients. On the other hand, D&O insurance is designed to financially help senior executives in the event their company is subject to legal costs resulting from a lawsuit.

Switching policy provider at the time of renewal, that is when your current insurance is near expiration, is straightforward. However, it's important to maintain the continuity of coverage while switching insurance providers. Our team at BLACAZ is always eager to assist you, so get in touch if you have any concerns.