Directors and Officers Insurance
Directors and Officers Liability Insurance is designed to protect the personal assets of directors and officers by providing indemnity for loss arising from a claim as a result of a 'wrongful act' committed by them in the course of performing their fiduciary duty. A Wrongful Act is usually defined as an error, misleading statement, mis-statement, conduct, omission, neglect or a breach of duty.
Who is covered?
Directors and officers are the people involved with managing and running the organisation. It covers the individual person, not the company. The people generally covered include:
• a director, secretary or executive officer
• an employee
• past, present & future natural persons
• a natural person as deemed by legislation
Coverage and/or reimbursement of costs is only available where the company has indemnified the individual/s.
What is the standard cover provided?
Judgements
Settlements
Investigative costs
Defence costs
Costs to appear at inquiries or investigations
Please ensure that you read your specific schedule and policy wording to establish actual covers quoted / taken.
Some General Information
The law imposes duties upon the directors and officers of companies which they are personally liable for including:
• exercising a reasonable amount of care and diligence in the conduct of
their duties and use of the power of their position
• to not misuse information or their position to gain advantage for
themselves, or to disadvantage shareholders or the company
• preventing the company from trading whilst insolvent
Anybody involved in the management of and have duties and obligations which may arise from one or more of the following statutes:
• Corporations Law
• Workers Compensation legislation
• Occupational Health & Safety legislation
• Superannuation legislation
• Trade Practices Act and Fair Trading Acts
• Equal Employment Opportunity and Anti-Discrimination legislation
• Income Tax Assessments
• Act Environment legislation
• Customs and excise legislation
Other coverage areas
In the current market, several Underwriters have released broader based Directors and Officers Liability policies, generically called “Management Liability Covers”.
A number of these policies may be endorsed to include aspects of cover such as Employment Practices Liability (ie. unfair dismissal, harassment), Statutory Liability Cover (fines and penalties) and also provide valuable access to experienced Legal Representatives. Please contact our office should you have any questions about these options.
Historical claims information
| Claim Source |
Public Company (%) |
Private Company (%) |
| Shareholders |
50 |
29 |
| Employees |
22 |
44 |
| Competitors |
6 |
6 |
| Customers |
15 |
17 |
| Government |
2 |
0 |
| Others |
5 |
4 |
Source: 1996 Watson Wyatt D&O liability survey