Last edited 28 Jan 2016

Directors and officers insurance

Directors and Officers (D&O) Insurance provides insurance cover for company directors and protects them against claims made against them and which arise from actions taken by them on behalf of the company whilst under their direction. Directors are usually automatically indemnified by the company itself for any failings that may occur in the execution of duties whilst a D&O policy, paid for the by the company, will protect against a wide range of third party claims.

Claims against directors can arise from a variety of sources, for example shareholders or employees. In the case of large public companies D&O cover is vital as it would be unrealistic to expect a director to be intimately acquainted with every facet of the business. Potential liability can arise from a variety of directions, so insurance cover of this nature is essential not only to protect directors but also to assist in the recruitment of new directors from time to time.

Directors cannot insure themselves against being found guilty of criminal actions whilst executing their duties as a director. So D&O insurance would not extend to providing cover in the event that a director was found to have permitted the company to trade whilst insolvent.

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