What Does It Cover
Legal defence costs, and in certain circumstances, civil fines, and penalties imposed by an official body, resulting from claims made against individuals (not the company as a whole) for alleged Wrongful Acts carried out in their capacity as a director or officer of your company.
Wrongful Acts Include:
Breach of duty including breach of trust
Breach of warranty of authority
Negligent act, error, or omission
Negligent misstatement or misleading statement
Defamation committed in good faith
It may also cover the cost of defending civil, criminal, or regulatory proceedings
Who Does It Cover?
As well as current, most policies cover future and past directors and officers of a company and its subsidiaries, including non-executive directors.
A director has its legal definition.
An officer of a company holds a position of authority in your company and is responsible for managing its affairs.
Typical Claim Scenarios
Claims made by shareholders and investors that hold you responsible for losses
HMRC investigations into your tax payments
Investigations by the police or Serious Fraud Office
Accusations of wrongful trading brought by liquidators
Health and safety investigations by the Health and Safety Executive (HSE)
Claims brought against you due to alleged errors in administration, particularly around pension and employee benefit
Some Specific Exclusions
Deliberate acts, fraudulent and or criminal conduct, insider trading or embezzlement for example are not covered.
Options Of Cover:
D&O generally has three main cover options (known as Sides)
Side A
Covers claims against individual directors and officers where the company cannot indemnify its directors or officers, thus protecting the individual’s assets.
Side B
Is for the benefit of the company, where it does indemnify the director/officer, Side B provides reimbursement for the company.
Side C
Is entity cover for publicly traded companies – covers claims against the company itself for securities claims.
Employment Practice Liability (EPL)
Covers the company against claims made by employees alleging various employment-related issues, such as harassment, discrimination, wrongful termination, failure to promote etc. EPL can often be purchased as an extension to D&O insurance.
Note: As always, insurance policies and claims are subject to the terms and conditions of the respective insurance policy.
Insurance companies and their policies are not all the same, so always refer to your own insurance documents. We are here to help you and help you understand your insurance. If at any time you are unsure of anything regarding your insurance policy and the cover it provides, please do not hesitate to speak to us.