WHAT IS THE PURPOSE OF D&O INSURANCE?

Directors and Officers’ insurance (D&O) covers a wide range of scenarios: from the legal costs and damages where actionable mistakes have been made, through to arranging and paying for legal representation throughout lengthy and expensive official investigations. This can include protection against wrongful acts arising from the employment process, such as accusations of sexual harassment, discrimination, or wrongful discipline.

The increased focus from regulatory bodies will require that you protect your key personnel against any legal action taken directly against them.

Claims, where a director’s personal liability could be questioned, might arise because of investors or shareholders blaming the decisions of directors for their losses or perhaps because of an investigation undertaken by regulators.

WHY MIGHT YOU NEED A D&O POLICY?

In an increasingly litigious society, there is a growing risk of directors being sued personally in matters associated with their business activities. Individuals are exposed to claims from a wide array of individuals and organisations, including:

• Employees
• Regulators
• Customers
• Creditors
• Government Agencies

all of which can be protected against by a D&O policy.

Another major advantage of having a D&O Policy is that it will give you the benefit of access to the Insurers’ expert legal and professional advice in the management of the situation. This ensures that the management of the company can continue to dedicate the necessary resources to run the company and valuable management time is not wasted on lawyer’s meetings, research, formulating a defence, etc.

There have been occasions where companies have ceased trading because of the drain placed on management time by defending an action without the benefit of the expert advice and assistance which a D&O Policy provides.