Directors' & Officers' Liability Insurance Policy

Directors and Officers (D&O) of companies inevitably make decisions on daily basis that can have tremendous consequences and effects on the people around them. Most Directors and Officers try to be circumspect in their dealings. However, it is worthy of note that even the best managers make mistakes.

So, what happens if as a director or officer, you make a decision or take an action on behalf of your company that is seen as a “wrongful act” – even if you were acting in good faith?

This could result in a claim made against you for which you may be financially liable. Such claims are deemed insurable and can be done through the instrument of Directors and Officers Liability Insurance.

Directors’ and Officers’ liability covers Directors and Officers of companies financially for any claims made against them in the line of duty. The policy pays for any costs related to the claim, such as court proceedings or financial losses that result from the event.

What is Directors and Officers (D&O) Liability Insurance?
The Directors and Officers Liability Insurance (often called D&O) is Liability Insurance Policy payable to the Directors and Officers of a company, or to the organization(s) itself, as indemnification (reimbursement) for losses or advancement of defense costs in the event an insured suffers a loss as a result of a legal action brought for alleged wrongful acts in their capacity as Directors and Officers.

The D & O cover is an insurance cover for the Directors and key officers of organizations who occupy critical roles or decision-making positions with their personal assets exposed to any form of liability by virtue of commission or omission in the course of carrying out their duties as required for their roles / responsibilities.

What does it Cover? Directors and Officers Liability
The policy covers the Loss of each Director and Officer resulting from any Claim first made against the Director and Officer during the Policy period for any Wrongful act of the Director in his capacity as a Director and Officer of the Company.

Corporate Reimbursement
The policy covers the loss of the Company resulting from any claim first made against the insured during the policy period for any wrongful act of the insured in the insured's capacity as a Director, Officer or Employee of the Company.

The purpose of a D&O policy is to provide financial protection against consequences of actual or alleged “wrongful acts” when acting in the capacity as directors and officers of the Company. It will pay for defense costs and financial losses resulting from any claim made against the insured but only when and to the extent that the company has indemnified the insured for the loss. In addition to this cover are certain extensions.

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