Directors and Officers Liability Insurance is designed to protect the director or former director where the company cannot provide indemnity out of its own funds e.g. due to insolvency, or where the company will not provide indemnity e.g. Articles of Association prohibit the indemnity.
D&O Insurance is concerned with purely financial losses – it is designed to protect the personal assets of company directors and officers in the event that they are sued while acting in their capacity as a director or officer.
Management liabilities is an extension of cover that can protects the company from legal liabilities arising from the actions taken by its employees, as well as its directors and officers.
Directors and Officers Liability Insurance protects the individual liabilities of management from the cost of defending or settling claims. Successful claims result from breaches of duty or trust (e.g. misuse of sensitive or confidential information), negligence (sub-standard conduct or due diligence), pollution, defamation, claims of health, safety and welfare at work.
Litigation is not the only risk for directors and officers. Many public agencies now enforce corporate responsibilities in Ireland. These include Office of the Director of Corporate Enforcement, the Competition and Consumer Protection Commission, Health and Safety Authority and the Environmental Protection Agency.
The Policy EXCLUDES:
- claims for bodily injury or damage
- prior and pending claims
- actions arising from the dishonesty, fraud or malicious conduct of a director /officer
- claims where the director has made an improper gain, profit or advantage, and
- breaches of professional duty.
Important policy features:
Severability clause: this protects innocent directors where another director has misled insurers or committed some other serious breach of the policy.
Dishonesty exclusion: this ensures that a director is entitled to payment of defence costs up to the point that he or she is found to have been dishonest by a court of law, or admits dishonesty.
Costs: payment of legal costs for advising and representing the director in investigations, trials and public inquiries is essential.
Choice of representatives: insureds need to be free to choose specialist legal advisors, subject to costs being fair and properly documented.
No delay: costs should be payable as incurred and without unnecessary delay. Delay in payment of defence costs can compromise effective legal representation.
Disputes clause: good policies provide fora speedy and fair means of dealing with disagreement between the insured and insurers.
Employment Practices Liability Insurance is offered as an extension to cover with some providers. This covers your legal defence costs and compensation awards for employment disputes, such as wrongful termination and discrimination.