Directors and officers insurance (D&O insurance) is designed to protect the directors and officers of a private and/or public company for alleged wrongful acts including claims of mismanagement, for example breach of fiduciary duties, of the company. These legal actions or investigations of wrongdoings are typically brought by shareholders, employees, regulators, creditors, competitors, liquidators and others. D&O Insurance can also be extended to cover the entity for security, employment practices liability and statutory liability to protect the balance sheet of the company.
What is Directors and Officers Insurance?
What does Directors and Officers Insurance Cover?
D&O policies are typically structured with three available insuring clauses – Side A, B & C
Please have a look at our “how does D&O insurance works” article to understand how a D&O policy responds.
Additional Coverage and Policy Options
Statutory Liability
Statutory Liability insurance is protection for the Directors & Officers and the company (when applicable) for a claim alleging a statutory breach. Some examples of the types of statutory investigations and claims are Workplace Health & Safety, Employment Practices Laws, Environmental Protection Authority, Spam and Privacy Laws. Statutory Liability is typically included for the Directors & Officers but not the entity on Directors’ & Officers’ policies. Statutory Liability is an option that can be added to most D&O policies for an additional cost or can be purchased as a standalone policy.
Employment Practices Liability
Employment Practices Liability (also known as EPL) insurance is protection for the Directors and Officers and the company (when applicable) for a claim alleging an Employment Practices Breach. Employment Practices Liability is an additional inclusion for the Directors and Officers but generally not for the entity. Examples of matters which fall under the category of EPL are wrongful dismissal, sexual harassment, discrimination, bullying, whistleblower actions. Entity Employment Practices Liability is an option that can be added to most Directors and Officers policies for an additional cost.
Excess Side A
As outlined above, Side A coverage is protection specifically for the Directors & Officers. Depending on how a D&O insurance program is structured, Directors & Officers may be left exposed due to sharing the limit with the company (Side C). An option to further protect the Directors & Officers is to purchase an Excess Side A limit or policy. Some Directors & Officers policies include a small additional limit of Side A in excess of the policy limit if the Side A limit is fully exhausted. There are also insurers that are now offering Excess Side A policies as a stand-alone policy to sit in excess of the master policy.
Prospectus Liability Insurance
Prospectus Liability Insurance is a type of coverage that can be purchased on a stand-alone basis to respond to claims alleging a breach of securities law in connection with a specific prospectus. For more information on Prospectus Liability, please see our blog post @ Prospectus Liability Insurance
Directors and Officers policies have a Change in Control provision that states that upon a Change in Control the policy will only respond to wrongful acts or conduct that has occurred prior to the effective date. To pick up the exposure post Change in Control date, the insured should purchase a Run-Off policy to cover the Directors and Officers exposure from that date forward. The Run-Off policy is usually purchased for 7 years to match the statute of limitations in Australia.
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Directors and Officers Insurance Blogs
What is the Difference between D&O and ML?
In this article, we will explore the differences between D&O and ML insurance, their coverage scopes, and when each type of insurance is most relevant.
The current outlook on the 2023 D&O Insurance Market
Learn about the challenging D&O insurance market and the factors affecting coverage. Discover underwriting considerations for securing a policy and get helpful insurance broking advice. Stay updated on the 2023 market outlook and opportunities for new entrants.
How Does D&O Insurance Work?
Directors & Officers (D&O) Insurance policies are complex and can be confusing for any executive — but it’s well worth taking the time to understand your policy.
Read More Directors and Officers Insurance Articles Here
Quote Requirements for Directors and Officers Insurance
Public Companies have most of their information available to the public, but we recommend the following for our quoting process:
Please complete this Proposal Form and return to our brokers below to arrange a Directors and Officers Insurance quote. (Download Here)
What’s Next?
Let us work with you on an insurance solution that best suits your business needs.
Why work with KBI?
The KBI team has placed Directors and Officers Liability Insurance for over 300 public companies in Australia, Asia and North America. We have also worked with dozens of private and not-for-profit organisations.Our offering is tailored specifically for purchasing and managing Directors and Officers Liability Insurance and includes the following services.
1. Assistance with the submission process
so the insurers have the necessary information to properly underwrite and quote.
2. Quote comparison
we help clients make an informed decision by comparing the quotes (including plain language) so clients know what they are buying.
3. Limit analysis
we can assist clients with providing additional information to help decide what is an appropriate limit on their Directors and Officers Insurance.
4. Insurer meetings
can improve the quoting process as insurers become more familiar with the company and the key executives.
5. Updated information
we focus on Directors and Officers insurance so we continually provide updates to our clients and contacts through our D&O blog and newsletter.
6. Claims management
is crucial for Directors and Officers policy holders. Our D&O team not only has experience managing small and large D&O Claims, but we are a unique make up of senior brokers, lawyers and past ASX advisors, giving us a robust understanding of the process.
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Directors and Officers Insurance Testimonials
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