Directors and officers insurance offers protection to the personal assets of directors and officers of the company from the legal claims arising out of wrongful practices, errors, and omissions that occurred while performing their managerial duties. D&O insurance is a type of insurance policy that protects individuals who serve on the board of directors or as officers of a company from personal liability for actions taken in their capacity as directors or officers. The key Features of directors and officers liability insurance include coverage for legal defense costs and protection against claims.
- Racial discrimination claims – Protection against claims of unjust treatment or prejudice based on race or ethnic background.
- Accounting irregularities– Covers financial discrepancies, manipulation, or fraudulent practices in an organization’s financial reporting or accounting processes.
- Securities related claims (for the listed companies)- involve allegations of misconduct, fraud, or misrepresentation in the sale of securities.
- Management buyout claims
- Corporate governance violation claims
- Wrongful dismissal
- Harassment claims brought by employees
- Breach of regulation
In addition to the above, it covers Breach of Trust, Mismanagement of the company, Breach of fiduciary duty, Fraud or dishonesty, Defamation or libel, Insider trading, Wrongful trade practice, Violation of environmental laws, Violation of consumer protection laws, etc.
D&O insurance typically covers both the individual directors and officers as well as the company itself. It is designed to protect the personal assets of the directors and officers, as well as to provide financial resources for the company to defend itself against claims.
The below infographic explains the important features of the D&O insurance policy.
