Directors and Officers (D&O) liability insurance policies function as "management errors and omissions liability insurance," covering claims resulting from managerial decisions that have adverse financial consequences.
Such decisions could be related to
- Shares traded on a contingent fee system
- A drop in share prices resulting from a merger / acquisition
- Poor business decisions
- Failure to disclose material information
- Contractual disputes with contractors / suppliers or franchises
- Legislation governing Equal pay, Age discrimination, Disability, Sexual Harassment and Wrongful termination
D&O liability insurance can be written to cover the directors and officers of for-profit businesses, privately held firms, not-for-profit organizations, and educational institutions.
This is a type of liability insurance covering directors and officers for claims made against them while serving on a board of directors and/or as an officer.
The insurance is closely related to corporate governance, corporations law, and the fiduciary duty owed to shareholders or other beneficiaries.
Advantage of Taking Cover
- Protect the personal assets of directors and officers (corporate indemnification is not always possible)
- Protect corporate assets (from losses that could bankrupt corporations)
- Attract and keep talented directors and officers (by protecting their personal assets)
Risks Covered
D & O Policy is in Two Sections
- The first Section protects the Directors personally when they cannot be reimbursed by the Company.
- The second section protects the Company but only when they are able to reimburse the Directors or Officers
The policy covers "wrongful acts" which includes includes actual or alleged error, act, misleading statement, breach of duty, omissions or misstatements while acting for the organization.
D&O policies are written on a claims-made basis.
The policy is on a ‘claims made’ basis. ‘Claims made’ means that Coverage will respond to incidents arising on or after the policy retroactive date and which are reported during the term of the policy.
Extensions Available
Most policies can be extended to include:
- External Directorships
- Spousal Extension
- Employment Disputes
- Outside board cover (for associated companies) double excess basis - i.e. excess of other insurance, excess of other indemnity
- Entity coverage for security claims
Major Exclusions
- Intentional illegal acts or illegal profits
- Criminal fraud
- Insured Versus Insured (IvI) claim
- Pollution exclusion - can be amended to provide shareholder cover and defense costs.
- Bodily injury/property damage
- Insider Trading
- Dishonesty or fraudulent actions (in fact or once proven)
- Professional Liability
- Fines, penalties and punitive damages
- Liability from pension funds
- Prior and pending litigation exclusion
Deductible
A deductible for each and every loss under the policy may be applicable under some sections of the policy.
Premium Rate
Premium rates are based on:
- Type of profession
- Annual turnover
- Territory involved
- Policy limit of liability
- Policy deductibles
- Your professional experience
- Extensions opted for
Important Information
Please note that for the easy understanding of the insurance policy, we have highlighted the important aspects. We will be glad to receive your queries and discuss the full set of policy terms, conditions and exclusions.
For more information, please contact Nasco Gulf at +971 4 351 8610.
Claims Settlement
The insurer will pay on behalf of Directors or Officers for losses resulting from a claim made against them arising out of a wrongful act committed. Losses include defense costs and any award.
You must alert us of any accident that may lead to a claim covered under the policy, and our team of experts will assist you in the quick settlement of the claim.
Call us as soon as possible, in case of an accident, and our team of experts will guide you through the claim process. For more information, please contact Nasco Gulf at +971 4 351 8610