Directors and Officers Liability Insurance

Board of Directors

The policy is intended to protect Directors & Officers (D&O) against claims of wrongful acts under their capacity as company’s executives.

Prior claims, or claims that the insured is aware of, are not covered. However, is some instances insurance companies take the risk of prior years under the condition that the insured has previously Directors’ & Officers’ Insurance policy with another company. This is known as, retroactive period.

As the name reveals D&O insurance covers the Directors & Officers of a company. In some modern policies though the insurance now cover not only the directors and the officers but also the company and the employees.

Any stakeholder can bring an action against the company putting into force the insurance company. Customers, suppliers, investors or even the company itself are stakeholders who can potentially bring an action against the company.

In this new era of business directors demand D&O policies before taking a sit to the Board of Directors. This can be said is a wise decision, as in case something goes wrong Directors will be forced to pay all the damages from their own pockets.

Before the policy is issued the insurer and the insured are agreed to a specific limit of coverage. Once the limit is used, the insured cannot claim any further remuneration by the insurance company for any future claims.

Standard exclusions of D&O Insurance are fraud, dishonesty, pollution and bodily injury. Although some policies cover fines as well, under Cyprus law insurance companies are not allowed to pay such costs, making fines a standard exclusion in Cyprus.

As soon as the insured is informed about a claim must notify the insurance company. The insurer will make sure that the claim arise during the policy period. This is the reason why D&O Insurance is also known as “claim made” coverage.

A claim can be made in many different ways. A claim might have the form of a court proceedings or an alternative dispute resolution, ie arbitration or mediation. The insurance company will pay on behalf of the insured all the damages imposed by the court, by arbitration or by mediation. D&O coverage will also pay the attorneys costs. In some cases will also pay the court attendance for the insured person as well as the PR expenses that will occur due to the claim.

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