Directors' & Officers' Insurance

Insurance for Directors and Officers of companies 

Shared culpability is how the legal system views directors and officers of an organisation - even non-executive directors can be held liable for the actions of other directors. Which means you could end up fighting a court battle over something your colleague did, even if you didn’t know they were doing it.

The last few years have seen a rise in claims on directors’ and officers’ policies, due to more stringent governance guidelines and increased oversight by regulators.

There are plenty of insurers willing to take on this risk: the challenge is choosing the right one. 

What does Directors’ and Officers’ insurance cover?

Directors’ and Officers’ (D&O) liability insurance gives financial protection in the event you are sued personally. D&O protects you from claims made against you or your co-directors within the scope of your everyday business. It is there to cover you for legal costs as well as any damages. 

 

D&O claims breakdown

According to claims figures from a leading D&O insurer, you need to worry about:

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    Regulators

    4 in 10 D&O claims relate to regulatory governance

  • Speaking up icon

    Clients / competitors

    3 in 10 claims arise from clients or competitors

  • Subtle word in your ear large icon

    Employees

    2 in 10 claims come from disgruntled employees

 

What does good D&O insurance look like? What to look out for:

D&O insurance is there to pay for costs relating to mounting a defence, and any damages or settlements relating to the matter. Any allegation made by a third party against a director or officer, no matter how frivolous, needs to be rigorously defended: otherwise, there is a risk of judgement being entered in default of a defence. 

  • Entity cover for employment practices liability claims
  • Official investigations 
  • Crisis management
  • Entity cover for securities claims (for listed companies)
  • Retired directors
Other areas that give rise to claims include:
  • Positions on outside boards 
  • Wrongful termination, sexual harassment or discrimination 
  • Initial public offerings 

Directors and Officers can be held liable for their own actions and inactions, and the actions of their co-directors.  Directors’ personal liability for the performance of a company is unlimited. If the shareholders want to sue for mismanagement, they can - and quite frequently do. 
 

Protect your family from your business

Because you never know what's around the corner

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+31 (0)10 720 0620

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