DIRECTORS AND OFFICERS LIABILITY INSURANCE

Breach of duty

D&O Insurance covers Directors and Officers, as they are liable, even through their personal property against third parties’ claims (or even their own Company) for errors or oversights occurring during the execution of their duties.

To whom does D&O apply?
D & Ο Insurance applies to Directors and Executive Officers of the following Organisations and Businesses:

Private Companies
Companies listed in the Stock Exchange
Investment Companies
Financial Institutions
Non-Profit Foundations
Charity Institutions
International Companies (based anywhere in the world)

Reasons why D&O Insurance is necessary
Protection of the Company members against:

the increased and stricter Regulatory / Supervising Authorities Audits with reference to corporate transparency and the behaviour of Executives
the repercussions of the global financial crisis, resulting in bankruptcy, leading to law suits against Directors & Officers
the expansive activities overseas (Global Economy)
the increase of mergers and take-overs
the cut backs in staff, salary reductions, discriminations causing increasing claims by employees, but also third parties, such as minority shareholders against Directors.
attracting the top Executive around to high-ranking positions

Who can claim against a director or an officer of a Company ?
Shareholders
Usual reasons concern mismanagement, errors, oversights, waste, breach of duty, financial misguidance, a drop in the share price, incorrect assessment of take-overs and mergers, company bankruptcy

Official Authorities
The strictest legal frame on Directors and Officers liability has led to more frequent and stricter “official investigations” by State or professional & commercial Regulatory Authorities.

Workers / Employees
Due to biased discrimination, illegal dismissal, breach of work regulations or contract terms, denial of salary raise and promotion or sexual harassment

Clients, Providers, Competitors
For illegal conduct, refusal to abide by agreements, use of illegal promotional methods of products/services, violation of copyright regulations, exploitation of “classified” commercial information.

Lenders and other third parties involved
For not adhering to agreements or violating agreements, falsification of financial records

What does D&O Insurance cover?
D&O Insurance covers :

The expenses/ fees of external advisors for the investigation of the claim
The Legal Defence expenses
The Out-of-Court Settlement or
The Compensation of Court Decisions

Basic covers & extensions of D&O Insurance

Worldwide coverage
Insuring an executive against inability to receive compensation from the company itself
Payment of defence expenses according to the development of the claim defence
Automatic broad coverage of legal expenses to prevent and best deal with possible claims (audit, enquiries, etc.)
Coverage of the present, and stepping down directors
Claims of an Insured against another Insured.
Coverage for claims based from Labour Practice
Automatic coverage of new subsidiaries
Additional cover limit for non-Executive members of staff
Broad definition of Insured Person, as well as extension for Outside Directorship Executives
Defence expenses for claims arising from pollutions
Fines and penalties (provided they are insurable by Law
Coverage of legal expenses
Automatic insurance of subsidiary companies’ executives, however recently acquired
Insurance of executives transferred to other companies
Coverage of Director’s responsibility (failure to supervise subordinates)

Βasic exceptions:

Pre-existing and current legal battles
Damages noted on previous Insurance Policies or that have taken place before the retroactive-date
Fraudulent acts (the exception is only valid if there is a final Court decision or admission by the Insured.
Profit or illegal financial gain (the exception is only valid if there is a final Court decision or admission by the Insured)
Pollution (Court expenses are covered)
Damages from Death/ Bodily Injury & property damage

D&O Insurance evaluation criteria