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An Explanation of Directors and Officers Insurance

Directors and Officers Liability Insurance, also known as D&O Insurance covers the cost of compensation claims made against your business, its Directors, Key Managers, Officers and Trustees for alleged wrongful acts.

Why should we take up this cover?

The term ‘wrongful acts’ could arise from actual or alleged breach of trust, breach of duty, neglect, error, omission, mis-statement, libel, slander, breach of warranty, breach of authority and any wrongful trading.

Directors, Officers and Trustees have specific duties, responsibilities and powers relating to their positions within the organisation. These are usually set out in their job description, terms of reference or Contracts of Employment where applicable. If a Director or Officer of your Company is found to have acted outside of their terms of reference, civil, criminal or regulatory proceedings can be brought against them.

Directors and Officers Liability insurance should therefore cover the costs of defending these proceedings as well as compensation costs that arise from an unsuccessful defence.

Claims against Directors, Officers and Trustees can be brought by an ever-widening group of people including employees, (past and present) customers, suppliers, creditors, bankers, regulatory groups and shareholders with issues leading to litigation being as widespread as wrongful termination, discrimination, harassment, dishonesty, fraud, financial reporting and Health & Safety at work violations.

Optional Cover Extensions

Employment practices liability insurance can be brought as an extension of Directors and Officers Liability Insurance. Developing legislation means that there is a broad range of potential actions to consider including: –

Wrongful dismissal or termination, harassment or discrimination on the basis of sex, race or religion, employment-related libel, slander or defamation, invasion of privacy, wrongful failure to employ or promote and retaliation (where the employee believes that raising a complaint has led to their employer discriminating against them).

The cover available changes from Insurer to Insurer with some covers not always being provided by Underwriters. Any offer of cover is also subject to a written proposal form from any applicant.

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