Directors and Officers FAQ
Q: What does a D&O Policy Cover?
Directors and Officers Liability Insurance protects company directors and officers against claims arising from their wrongful acts whilst managing their business.
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Q: What is an officer of a company?
An officer can be any individual within a company who makes decisions which affect the company. The title “officer” depends on what an individual does rather than what he is called.
Q: What D&O limit of indemnity should my client buy
The limit of indemnity chosen by your client should be a combination of what they perceive their exposure to be and how much they are prepared to spend. Remember that this insurance protects your client’s personal assets.
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Q: Is corporate liability the same as corporate reimbursement?
No. Corporate reimbursement reimburses the company when the company has paid indemnity or defence expenses on behalf of one of its directors or officers; it is included in most directors and officers policies as standard. Corporate Liability cover extends the policy to include protection for the company’s own liability and defence expenses.
Q: What are the differences between a D&O policy and a legal expenses policy
There are many differences; a D&O policy will include cover for compensation awards and settlements as well as the cost of the defence whereas a legal expenses policy will only usually cover the cost of defence.
Most legal expenses policies include a “prospect of success clause”, this says that, if in the opinion of the insurer the likelihood of winning the case is less than 50% they will not offer cover. Your D&O policy has no such clause and will respond regardless of likely outcome.
Legal expenses insurers will insist upon use of their own in house counsel and the Insured is required to immediately notify the Insurer of any potential claims without taking any action whatsoever. If the Insured deviates from these rules or responds in any way to the claimant, cover may again be denied with the Insurer claiming that any possible defence has been prejudiced. Whilst your D&O insurer will still require notice as soon as possible, any contact prior to such notice will be considered and any potential resulting prejudice will be assessed prior to a coverage position being determined.
Investigation costs and expenses are covered by both legal expenses and D&O policies although a legal expenses policy will specify for which organisations investigation expenses are included whereas an Angel D&O policy does not limit this.
A D&O policy will not cover any prosecution costs.
Q: Does a D&O policy include employment practices liability cover?
Our Directors & Officers Policies provide employment practices liability for individual Directors and Officers as standard, however, this only extends to claims made against Directors or Officers personally. In order for the company to be protected against employment practices claims they will need to purchase our Employment Practices Liability Extension. Nearly all employment practices claims are brought against the company but very few will specifically name a director or officer.
Q: What happens if the Insured has bought the corporate liability extension and the company uses the entire policy limit defending themselves, will the directors and officers be without cover?
Our Corporate Liability Extension has an additional limit for unindemnifiable loss which applies solely to claims made against individual directors or officers should the policy limit be completely eroded. The limit available for this extension is 50% of the policy limit subject to a maximum aggregate limit of £250,000
Q: Does the D&O policy cover investigation costs?
Our D&O policy covers the defence costs involved in any “formal” investigations initiated by any organisation. It is important to note that this does not extend to the internal investigations initiated by the company itself.
Q: Is Corporate Manslaughter covered?
Where the policy has been extended to include corporate liability the policy will respond to allegations of Corporate Manslaughter.
If you wish to obtain a quotation for Directors & Officers cover give one of the team a call on 0208 6513131