Director and Officers Liability Policy, Director & Officers Liability Insurance, D&O Policy

This policy is formally known as D&O Policy. As the name suggests this policy is designed to provide protection to the Directors and Officers of an Organization and/or Firm. But this policy is not limited to this; this policy also provides cover to the management and employees who has the power to take managerial decisions.

 

What actually are the risks that can cause legal issues?

These risks are personal liability of Director and Officers arising due to wrongful act in their managerial capacity i.e. Actual or alleged breach of duty, neglect, misstatements, errors, employment practices etc.

Who can be the person to take legal action against these Officers and Directors?

• Shareholders
• Employees
• Regulators 
• Suppliers
• Competitors
• Customers 
• Other Stakeholders like Joint Venture Partners, Lenders, Consultants, Trade-Unions etc.

What are the reasons that can force these people's to bring an action?

• Vulnerability to Shareholders, Stakeholders claims.
• Sexual harassment, Mismanagement of benefits, Wrongful discipline or demotion Discrimination allegations, Breach of an employment contract, Privacy invasion and other employment practices violations 
• Regulatory Investigations 
• According Irregularities 
• Exposure related to mergers and acquisitions 
• Corporate Governance requirements 
• Compliance with legal statutes etc.

What are the features of D&O policy that helps Directors and Officers to protect from these liabilities.

• Advancement of Defence costs
• Claims made principle: claims must be made during policy period
• Right to defend cover
• Cover for Subsidiaries
• Outside Directorship coverage
• Cover for Retired Directors
• Employment Practice Liability (EPL) cover for directors and officers
• Cover for failure / negligence to supervise against any Professional Indemnity related claims
• Cover for Regulatory Crisis Response
• Cover for Assets and Liberty Costs including prosecution, bail bond and civil bond expenses
• Cover for damage to reputation
• Cover for Heirs, Estates and Legal Representatives
• Bilateral Discovery Period
• Emergency Costs cover
• Kidnap response cover
• Special excess protection for non executive directors
• Cover for pollution related claims for defence costs and shareholder claims
• Insured vs Insured (defence cost cover)
• Severability: non-guilty insured is covered

What is not covered under D&O policy?

• Prior Claims and Circumstances.
• Deliberate dishonest or fraudulent act
• Bodily Injury and Property Damage claims with carve back for defence cost