Accountability. This is the way the justice system deals with managing directors and senior executives in a company: According to this logic, you can be charged in a court case for something your colleague did, even if you knew nothing about it. D&O insurance protects you against claims made against you or your managing director colleagues that relate to the scope of your daily duties and activities.
Board members, CEOs and senior executives assume responsibility on behalf of companies. However, their business activities can lead to losses affecting the company itself or third parties - e.g. due to incorrect investment decisions, non-compliance with new legislation, etc. As a result, executives now often face claims for damages and may have unlimited liability for financial losses up to the amount of their assets.
What a D&O insurance policy covers
In the event that an executive of your company is personally sued, D&O insurance covers the cost of defense and any related damages or settlement payments.
Any charges filed by a third party against a director or executive, no matter how unsubstantiated, require a serious defense. Any other approach may have unfavorable consequences for the defendant and the company represented.
- Liability arising from labor practices
- Costs of preparing and representing executives in formal investigation proceedings
- Claims related to issuance and/or trading of shares (listed)
- Outgoing/retired executives
- Crisis management costs
