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Director and Officer Liability 

Director and Owner’s Liability Insurance covers the liability of the members of the board of directors which may arise due to wrongful acts in their managerial capacity. This provides coverage to past, present and future directors; officers and employees of the organisation against alleged breach of duty, neglect, misstatements or errors in their official capabilities.

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Current, future, and former directors and executives of a firm, as well as its subsidiaries, are routinely included. D&O insurance provides coverage based on the number of claims filed. This means that claims are only covered if they are filed when the policy is active or within a contractually agreed-upon extended reporting period, which in some countries can last up to 72 months or even longer.

Advantages

 1. Financial Backing

  • The corporation is protected by directors and officers liability insurance, which also covers settlements, legal fees, and other expenditures. The D&O policy provides financial support for a basic indemnity clause, which protects officers and directors from losses caused by their participation in the organisation.

  • This could be one of the reasons why many officers and directors prefer to work with a firm that offers both indemnity and D&O coverage

2. Legal Cost Reimbursement

  • When a claim is submitted, D&O insurance policies can pay the expense of legal representation in a variety of situations. Directors and Officers Liability Insurance, in particular, can compensate private company leaders in the event of charges of wrongful actions, negligence, mistakes in judgement, and financial management.

  • Given that D&O cases can arise out of nowhere and without warning, it’s critical for private company executives to have the correct D&O policy in place.

3. Protection against Tax Liability, Civil Fines and Penalties

  • If the company goes bankrupt and the Director is held personally liable for unpaid corporate taxes, the D&O liability insurance coverage will cover it. The penalties and civil fines imposed by a court of law or any appellate or statutory authority might also be covered by Directors and Officers Liability Insurance.

  • These covers can be added to your D&O insurance as a bespoke add-on.

4. Covers Directors Personal Liability

  • According to the Companies Act, 2013, directors and chief officers of a business can be held personally liable for activities that violate their authority. In such a case, the directors and executives’ assets could be seized or, on a more serious note, they could be arrested.

  • Directors and Officers Liability Insurance provides protection against such claims by covering the costs of releasing the restrictions on a director’s personal assets and liberty through bail bond expenses.

5. Worldwide Coverage

  • D&O insurance policies can provide worldwide coverage for both jurisdiction and territory if the company operates in foreign locations. As a result, Directors and Officers Liability Insurance may provide protection against claims brought by shareholders, suppliers, and clients based in other countries.

6. Comprehensive Cover

  • Directors and officers liability insurance protect directors and officers from lawsuits brought by shareholders, customers, employees, vendors, and members of the general public. When the insured is functioning as a nominated director, the D&O insurance also covers lawsuits originating from the actions of another corporation.

7. Availability of Side A Cover

  • Side A and Side B coverage are included in a D&O policy. When the corporation is unable to compensate Directors and Officers directly, the Side A cover is designed to cover them. When the firm falls bankrupt or is barred by law from doing so, it may not be able to compensate its directors. Under Side, A coverage, directors and officers can seek indemnification from the insurer without having to go through the corporation. In usually, the Side A cover has Nil Excess.

8. Employee Related Claims

  • Employees may file a lawsuit against a firm for conduct such as discriminatory termination, sexual harassment, and so on. The directors and officers insurance includes an extension called Employment Practices Liability Insurance (EPLI) and Entity EPLI. The Entity EPLI extension extends coverage to the entire organisation.

9. Full Defence Cost

  • The legal fees for defending a case in court can be covered by the Director Liability Insurance policy. It can also compensate expenses for acting in response to an inquiry by authorities, a regulatory notification, and the cost of engaging a PR consultant to reduce losses through add-on covers.

10. Peace of Mind

  • D&O claims can come from a variety of sources, including clients, workers, contractors, and government authorities, without warning. In general, disputes from competitors and creditors are fairly prevalent for private enterprises. D&O insurance ensures that private company leaders are covered regardless of where disputes arise by providing timely and effective coverage

Coverages

  1. The organization’s Board of Directors and Officers.

  2. Subsidiary company directors and officers.

  3. Independent or non-executive directors.

  4. A company employee who serves in a managerial or supervisory capacity for the company.

  5. A risk manager who works for the company.

  6. Secretaries to corporations.

  7. A company employee who is not a director or officer and is functioning as a lawyer for the company.

  8. Any employment or security claim.

  9. All other claims against a director only if they are made on a regular basis.

Main Exclusions

  1. Dishonesty.

  2. Misuse of company’s fund

  3. Personal Profit

  4. Prior or pending ligation or notice

  5. Claims covered by other insurance

  6. Standard Exclusions (War, Invasion & radio activity etc)

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