Director's & Officer's Liability Insurance

Directors/Officers are now perceived as Professional Managers who should be accountable for their actions. A Director/Officer owes a duty towards--

  • The Company
  • The Shareholders of the Company
  • Employees
  • Creditors
  • Customers
  • Competitors
  • Members of the Public
  • Government and Other Regulatory Bodies

He is therefore liable to face civil and/or criminal suits from these quarters for alleged breach of duty due to wrongful acts resulting from various reasons which may include--

  • Failure of supervision as per Company norms
  • Inaccurate Financial Statements/ Errors in annual accounts
  • Mismanagement of Fund
  • Mis-statement in prospectus
  • Allotment of shares
  • Unauthorized or imprudent loans/investment
  • Imprudent expansion resulting in loss
  • Unwarranted dividend payment, salaries or compensation
  • Misleading statement filed with Stock-Exchange
  • Wrongful dismal/ Sexual Harassment of an employee
  • Actual or alleged breach of trust

The Insurance Coverage applies to all Directors of the Insured Organisation including Non-Executive or Shadow Directors, all Officers of the Insured Organisation including Managers or Company Secretary, past Directors/Officers and new positions created after inception of the Policy.

Director’s & Officers Liability Policy provides Indemnity to the Assured in respect of claims made against them during the policy arising out of a wrongful act in their capacity as a Director or Officer of the Company.

The policy comprises Two Sections--

  • The Individual Director’s and Officers Section which indemnifies the directors and officers in respect of claims made against them where the company is not permitted to reimburse them.
  • The Company Reimbursement Section which indemnifies the company in respect of claims made against the directors or officers of the Company which it (the Company) may reimburse the directors and officers in accordance with the Articles of Association.

The term Wrongful Act is usually defined in the policy as follows:

Actual or alleged breach of duty, breach of trust, neglect , error, misstatement, misleading statement, omission, breach of warranty of authority or other act done or wrongfully attempted by any Director or Officer