Directors & Officers Liability Insurance (D&O Liability Insurance)

Features & Benefits of D&O Policy

Here are some of the features and benefits of D&O liability insurance:

• D&O liability insurance provides blanket cover on an unnamed basis.
• This insurance provides coverage for all ages of directors irrespective of designation, including retired, present and future directors.
• Since officers are not defined in the policy working, this insurance policy provides coverage to one working at managerial or supervisory positions or someone on whose recommendation the board members act.
• Any kind of legal hassle will be covered under D&O insurance.
• Any civil or criminal action against directors and officers is covered.
• The plan offers security in case of any alleged or actual error, omission, misstatement, breach of duty, or misleading statement.
• Generally, investors consider directors and officers liability insurance as a pre-requisite for providing funds to a company.
• There are some plans which extend the cover to employees as well as Independent nominee directors are accountable to stakeholders.

Directors and Officers insurance Coverage

D&O liability insurance provides coverage for the following:

• Right to defend coverage
• Coverage for subsidiaries
• Coverage for outside directorship
• Coverage for retired directors
• Employment practice liability cover
• Cover for negligence/ failure to monitor any claims related to professional indemnity
• Regulatory crisis response coverage
• Coverage for assets and liberty costs such as bail bond, prosecution, civil bond expenses, etc.
• Damage to reputation cover
• Coverage for heirs, legal and estates representatives
• Bilateral discovery period cover
• Emergency expenses coverage
• Kidnap response coverage
• Defense cost coverage
• Advancement of defense expenses
• Severability coverage
• Special excess security for non-executive directors
• Coverage for pollution-associated claims for defense expenses and shareholder claims

What Does D&O Insurance Not Cover?

D&O insurance does not provide coverage for the following:

• D&O insurance does not provide coverage for any kind of fraudulent activity.
• The policy does not provide coverage for any kind of coverage for intentional non-compliant activity.
• No coverage for any personal profit or illegal remuneration.
• No coverage will be provided if the action has been taken before the initiation of the policy.
• Any kind of property damage or bodily injury is not covered.
• Fines and penalties are not covered.

D&O Liability Insurance Risk Scenarios

Here are some of the scenarios under which D&O liability insurance can come in handy:

• In case an organization incurs any losses due to erroneous actions or decisions taken by the directors and officers in fulfilling their duties according to the memorandum and articles of association.
• In case of losses resulting from claims filed against them by any wrongful act in their capacity.
• With the written consent of the insurance provider, any legal expenses resulting from the prosecution of any director or officer for any examination, inquiry, investigation, or proceedings by the concerned authority.
• Any expenses incurred by the shareholder of a corporation for pursuing a claim accusing any director or officer and organization is lawfully obliged to pay as per the ruling of a court.
• It provides indemnity to the legal heirs/legal representatives of the director or officer in case the director or officer becomes insolvent.
• In case of sexual harassment, discrimination allegations, and other employment practice violations.
• Exposures related to mergers and acquisitions.
• In case of incautious investment choices.

Why is a Directors and Officers liability insurance plan required?

Here are a few reasons that make directors and officers insurance a necessity.

• Vulnerability of stakeholder/ shareholder claims
• Any kind of Discrimination, sexual harassment or allegations 
• Accounting irregularities are one of the reasons that make it necessary to purchase d&o insurance
• Regulatory investigations
• Mergers and acquisitions-related exposures
• Requirements of corporate governance
• Compliance with several legal statutes

The plan is formulated, especially, to safeguard the legal claims for wrongful acts such as errors, omissions, misstatements, breach of duty, negligence, etc. of directors/officers while on duty. The plan caters to the directors, officers and the organization itself.

Who Can Get Covered Under D&O Liability Insurance

Here is a list of people who can get covered under D&O liability insurance:

• Company Secretaries
• Legal heirs
• Directors
• Employed lawyers
• Estate representatives
• Officers
• Spouses
• Contractors/Sub Contractors

How To Raise A Claim Under D&O Liability Insurance?

Follow the below-mentioned steps to raise a claim under cyber insurance:

• Inform Insurer: Inform your insurer as soon as any legal complaint has been filed.
• Keep Documents Ready: When you will raise a claim the insurer will ask you to submit a set of documents along with the claim from so keep them handy.
• Fill-in Form: Ask your insurer to give you the claim form to fill it up and submit it as quickly as possible.
• Inspection: The insurer will send a team of inspectors to check if the reason behind raising a claim is valid and within the range of coverage provided by the insurance company or not.
• Compensation: Once the inspector gives a green signal, the insurer will provide compensation as specified in the policy.

How To Renew D&O Liability Insurance?

To renew your Directors and Officers liability insurance coverage, follow the below-mentioned steps.

• Step 1: Go to the Policybazaar Insurance Brokers Private Limited official website.
• Step 2: Fill in your policy number to get into your account
• Step 3: You can add or remove any add-on if you want as you can do it only either at the time of purchasing the policy or while renewing it
• Step 4: The premium amount of your updated insurance plan will be shown as per your addition or removal of any add-on
• Step 5: Click on the “Renew” button
• Step 6: Make the payment using your debit/credit card, UPI or net banking
• Step 7: Once the payment is done, the insurance company will send the updated insurance policy’s soft copy to the registered email. Apart from this, a hard copy of the policy is also sent to the registered home address in a few days

To avoid the cancellation of the policy, make sure to renew your cyber security insurance on time