Financial Loss Liability Insurance

We’ll protect you from high legal costs

In the case of claims for damages, there are always legal disputes between the parties involved. If there are claims in the room, board members are not only threatened with having to personally pay for financial losses. High costs for lawyers and court proceedings are often incurred in advance to ward off claims. Shortages and exclusions claimed by the D&O insurer, in addition to the high claims for damages, represent additional risks that threaten managers. The majority of companies of all sizes insured with Hendricks therefore now decide to take out supplementary insurance.

So-called “total losses” often occur in D&O insurance. In these cases, the scope of the asserted claim for damages corresponds exactly to the D&O coverage amount. Even if the damage actually incurred or alleged exceeds the D&O coverage amount, lawsuits are regularly filed for the insured amount.

The defence costs are usually offset against the sum insured. If a comparison is now made in the amount of coverage or if the amount is awarded to the injured party by a court decision, the D&O insurer will only pay damages less than the defence costs already paid out. These legal costs would then have to be compensated by the insured person. The costs for lawyers, experts and courts can be enormous and endanger the economic health of the managers concerned.

In addition, there is another area of application for property damage legal protection insurance. In order to avoid claims settlement, D&O insurers very often operate with the assertion of an exclusion. In most cases, the accusation is that the specific case is a conscious, knowing or intentional breach of duty. Nothing is easier for the insurer to prove than, for example, a deliberate violation of guidelines, statutes or instructions.

How does financial loss liability insurance help?

Our financial loss liability insurance covers the defence costs for board members, managing directors, supervisory or administrative boards that can arise in the above scenarios if claims are made against them in their function as a body due to financial losses. Similar to the D&O policy, the insurance covers the costs of defending against D&O liability claims and at the same time represents a supplement to the D&O insurance cover.

For example, after the D&O sum insured has been exhausted, the financial loss liability insurance covers the cost share, so that a complete compensation for the damage is possible via the D&O insurance. In addition, the exclusion of intent in the legal protection conditions of financial loss liability insurance is formulated in such a way that legal costs are only not covered if an insured person wanted to cause damage. The intentional breach of duty alone does not lead to an exclusion of cover.

The protection

In combination with our D&O insurance, the financial loss liability insurance as a supplementary policy guarantees the maximum possible cover for the costs of defending against claims for damages. But also as a so-called "stand-alone policy" it can fulfill an important protective function. For example, if it is not possible for the company to take out D&O insurance due to the risk or cost situation.