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Advantages of Directors and Officers Liability Insurance
Comprehensive cover

Directors and officers liability covers a wide range of litigation that could arise from customers, vendors, shareholders,employees and general public. This board insurance also covers litigation arising due to acts of another company, where the insured is serving as a nominee director.

Worldwide Coverage

D&O insurance can provide worldwide coverage. If the company has operations abroad, it can provide worldwide coverage for both territory and jurisdiction. This could cover claims arising from shareholders based abroad, or suppliers and clients being headquartered abroad.

Full Defence Cost

The Director liability insurance policy would pay for lawyers fees to defend a case in court. In addition, via add-on covers it can reimburse expenses to respond to a regulatory notice, investigation by authorities, and cost of hiring a PR consultant to minimize losses.


Employee Related Claims

Directors and officers insurance carry an extension called Employment Practices Liability Insurance (EPLI) and Entity EPLI. Employees may sue for acts such as sexual harassment, and biased termination.Entity EPLI extension extends this coverage to the company as well.

Benefits of Directors and Officers Liability

Directors' Personal Liability covered

  • As per the Companies Act 2013, Directors & Key Officers of a company can be held personally liable for acts where they breach their authority
  • In specific cases, assets of the directors and officers can be confiscated, or they may be arrested
  • Insurance for directors helps defend against such claims including paying for costs to free-up encumberances on Director's personal assets and liberty through Bailbond expenses

Side A Cover available

  • D&O policy provides Side A and SIde B Cover. Side A cover is specifically to indemnify Directors and Officers when the company is unable to indemnify them directly. Typically, Side A cover has Nil Excess
  • Company may be unable to indemnify its Directors when it is either insolvent or prohbited by law to do so
  • Under Side A cover, Directors & Officers can directly seek indemnification from the insurer without referring to the company

Tax Liability, Civil Fines and Penalties insured

  • In case of firm's insolvency, if the Director is held personally liable for unpaid corporate taxes, the same can be covered under D&O liability insurance
  • D&O insurance can cover civil fines and penalties levied by a court of law or any statutory or appellate authority. It is however necessary that the local law should allow a liability insurance policy to cover this
  • These covers can be bought as customized add-ons in our D&O policy
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FAQs

Side A coverage of directors and officers liability insurance policy protects directors, officers and executives from any legal claims by paying them for the defence cost, legal heirs cost, settlement fees and judgement if the company cannot or not willing to indemnify them. For instance, if company is declared bankrupt.
In directors & officers liability insurance policy, Side B coverage means the policy will reimburse the company if it indemnifies the losses of directors, officers and executives. This coverage is generally subject to some deductible. Side B coverage is also called as company reimbursement coverage in D&O policy.
Employment practices liability insurance also known as EPLI insurance, covers directors and officers against the claim made by their own employees. The claim under this cover includes wrongful acts arising from employment process, sexual harassment, discrimination and other employer related issues such as promotion issues. An extension known as Entity EPLI covers the firm as well, if the firm is sued along with the Directors for employment malpractice claims.
Generally, claims arising from dishonest and fraudulent acts of directors and officers are excluded from the policy.D&O for board will not cover willful violation of regulation, illegal personal profits, remuneration and advantage. Claims reported under the prior insurance policy is also excluded under this liability policy.

Insuropedia

Who are covered under Directors & Officers (D&O) Liability Insurance Policy?

Directors & Officers (D&O) liability insurance safeguards personal liability of directors and officers arising due to wrongful acts done by them in their managerial capacity. The policy covers the following under the policy:

Directors and Officers employed by the organization

    What is covered under a director and officer Insurance Policy?

    Directors and Officers Liability Insurance (D&O) covers the cost of legal defense of directors, even in their individual capacity, when the company is unable to defend them. The D&O cover applies to former, present, and future members of the board of directors or any employee performing a managerial role.

    Usually, the policy covers the following...

      What is the concept of Estates and Legal Representatives under Director & Officer Liability Insurance?

      The role of a director or an officer holds an imperative positive, and their role goes beyond just developing strategy and managing the performance of the company. These individuals represent the company and have a deep impact on its goodwill

      While serving on the board, they are expected to act diligently and exercise all skills. However, there are...

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