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7 things you need to know about Directors and Officers Liability Insurance

Here at Franklands, we've compiled 7 things you need to know about Directors and Officers Liability Insurance. Read all 7 below:

What is Directors & Officers Insurance

D&O insurance policies offer liability cover for company managers to protect them from claims which may arise from the decisions and actions taken within the scope of their regular duties.

Written by Paul Brown on 18th September 2015

7 things you need to know about Directors and Officers Liability Insurance

Here at Franklands, we've compiled 7 things you need to know about Directors and Officers Liability Insurance. Read all 7 below:

What is Directors & Officers Insurance

D&O insurance policies offer liability cover for company managers to protect them from claims which may arise from the decisions and actions taken within the scope of their regular duties.

The core purpose of a D&O policy is to provide financial protection for managers against the consequences of actual or alleged "wrongful acts” when acting in the scope of their managerial duties. The D&O policy will pay for defence costs and financial losses.

Such policies cover the personal liability of company directors and officers as individuals. With an entity extension the policy also covers action taken against the company following the alleged wrongful act of a Director.

Why do Companies buy D&O Insurance?

Quite simply: managers can make mistakes – and are often personally legally liable for them. They constantly walk a fine line, making tough decisions with huge impacts on the basis of the sometimes limited information available.

Who is Covered?

All current, future and past directors and officers of a company and its subsidiaries are covered under a D&O policy plus officers and staff members who assume a statutory responsibility through their role in the organisation such as the Company Secretary or Health & Safety Officer.

What is Excluded

  • Fraud
  • Intentional non-compliant acts
  • Illegal remuneration or personal profit
  • Property damage and bodily harm (except Corporate Manslaughter)
  • Legal action already taken when the policy begins
  • Claims made under a previous policy
  • Claims covered by other insurance
Who Initiates the claims?

 

Claims arise from a number of parties if they believe that a Director has committed wrongful act to their expense. Typical bodies include:
Minority shareholders

  • HMRC
  • Competitors
  • Purchasers
  • HSE
What if a Company is Merged or Bought

 

If the majority of the shares are passed to another entity then the policy automatically goes in to "run off”. This means that all actions which took place prior to the date of the sale are covered if they subsequently result in a Directors & Officers claim. However all new actions would be excluded and would need to be covered under the D&O policy of the purchaser.

What about Companies that operate in more than one country

By selecting the right insurer your UK policy can be extended to cover many foreign countries. Some nations will not permit cover to be written overseas. We check the permitted territories for you, if cover cannot be written from the UK we will arrange a locally permitted policy in the nation of your overseas operation.

We offer our own schemes underwritten by AIG and AXA. We also have broad access to open market D&O solutions beyond our schemes.

Speak to Franklands about your Directors & Officers Liability Insurance Today

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