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How Directors' & Officers' Insurance works

Financial, Executive and Professional Risks (FINEX)

By Angus Duncan | November 9, 2020

Here you will find a simple guide to how D&O insurance works; including key insights and a full PDF document for more detailed reading.

The difference in today’s world is that stakeholders have far greater forms of remedy against directors and there is an increased willingness to pursue claims against them.

Whether or not you’re ultimately held liable for such claims, the defence costs associated can be expensive, and the process can take months or even years. In practice, once a claim is alleged against a director for any wrong doing, they have two sources of protection –indemnification from the company or insurance under a Directors’ & Officers’ (D&O) Liability insurance policy.

The basics

  1. A D&O insurance policy is written on a claims made basis
  2. Claims can be made for wrongful acts committed during the policy period or prior to the inception of the policy, subject to any exclusion (see Standard Exclusions) or retroactive date
  3. The limit provided is often an aggregate amount to be shared between all directors and officers of the company, including directors and officers of any directly or indirectly owned subsidiary, and cover is usually written on a worldwide basis.
  4. Many policies contain certain additional limits, for example, cover for the non-executive directors once the main limit is exhausted
  5. Some policies may alternatively be written on an “anyone claim” or “AOC” basis, such that the limit applies for each claim, rather than in aggregate. However, that is less common in the current market (as of July 2020).

For more information, please download our indepth brochure from below.

Title File Type File Size
A simple guide to Directors' & Officers' Insurance' PDF .5 MB

Executive Director
Coverage Specialist, FINEX

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