Directors & Officers (Management) Liability
Directors & Officers (Management Liability)
Directors & Officers Liability (D&O) is also known as Management Liability. This covers the personal liability of anyone who is in a managerial position in the company. It is especially important for executive management or the board of directors. If a company gives indemnity to its board of directors, a D&O cover can also reimburse the company for it.
Some examples of when a claim can occur:
- An employee is disgruntled with how management has behaved or maintained certain company policy. Believing that he or she has suffered a loss due to this policy, a legal suit is brought personally against said management.
- A minority non-executive shareholder is upset that the company is making losses. He or she believes that this is due to poor or improper fiduciary management of a director. A legal suit is brought against this director.
- A fellow director embezzles money from the company and absconds leaving other innocent directors behind. Disgruntled minority and non-executive shareholders sue the innocent directors left behind in the company.
While emphasis is usually given to senior management or those seated on the board of the company, the actions of any manager in the company is covered under a D&O cover. There is also no need to individually name each person. As long as the person was involved in a managerial capacity in the company, they will be covered. As long as the cover is active, personnel in managerial capacities who have left the company continue to benefit from the cover as long as they were active when the cover was active.
This is a crucial cover especially for publicly listed companies but also important for smaller companies perhaps looking to attract new investors. If the incoming investor is going to take up a board seat, they will especially want to be indemnified by a superior insurer.
Whatever your needs, speak to us and we will put in place a cover to give the leaders in your business peace of mind.
