Directors and Officers insurance Secure your leadership
Protect your leadership and decisions with Directors and Officers Insurance.
In an increasingly complex business world, executives face increasing risks of lawsuits related to their professional responsibilities.
At Covalen, our team specializes in Directors and Officers Insurance and has one mission: to help you protect your career and your business.
What is Directors and Officers Insurance?
Directors and Officers Insurance, or D&O, is essential financial protection for those at the helm of a business. It covers legal fees and potential damages related to their business decisions.
This insurance is versatile, providing coverage in the event of a lawsuit for alleged mismanagement, breach of duty or negligence. It applies to a wide range of scenarios, from employee disputes to shareholder litigation.
Coverage typically extends to directors, senior executives and board members. It is divided into three main areas:
- Direct protection for directors
- Reimbursement to the company indemnifying its directors
- Coverage for the company in certain circumstances
It's important to note that fraudulent acts and illegal profits are generally excluded from this insurance. The cost varies depending on the company's size, industry, and history.
In an increasingly complex business world, this insurance provides crucial peace of mind, allowing leaders to make decisions without constant fear of personal consequences. Therefore, it is becoming a necessity for many organizations.
Who needs Directors and Officers Insurance liability?
- Senior executives: CEOs, managing directors, CFOs and board members.
- Companies of all sizes: startups to large listed companies, including SMEs.
- Non-profit organizations: associations, foundations and charities, condominium associations.
- Public institutions: schools, universities and healthcare facilities.
- Independent directors and interim officers.
Ten factors that influence your D&O insurance premium
Several key factors influence the cost of your D&O insurance premium:
- Company size and structure : The larger and more complex the company, the higher the risks, which can increase the premium.
- Business sector : Some sectors are considered riskier than others, directly impacting the cost of insurance.
- Financial situation : A company in good financial health will generally benefit from more advantageous premiums.
- Claims history : A history of previous claims can significantly increase premium costs.
- The extent of coverage : The broader the coverage is, the higher the premium is.
- Management experience : Experienced management can reduce the perceived risk and, therefore, the premium.
- Stock market listing : Listed companies face additional risks, which can increase the cost of insurance.
- Territory of operation : International operations can increase risk and, therefore, premiums.
- Governance policies : Strong corporate governance practices can reduce premiums.
- Selected coverage limits : Higher limits will naturally lead to higher premiums.
A personalized assessment with a specialized broker will determine which factors most relate to your situation.
Here are the main risks covered
- Financial mismanagement : imprudent financial decisions and errors in financial reporting
- Breach of fiduciary duty : breach of duty of care and conflicts of interest
- Employee disputes : Discrimination, harassment and wrongful dismissal
- Shareholder lawsuits : Allegations of mismanagement and decline in share value
- Misrepresentation : Misleading information in official documents and material omissions in communications
- Regulatory violations : Non-compliance with laws and regulations and sanctions imposed by authorities
- Contested mergers and acquisitions : Decisions called into question during transactions
- Cyber risks : Data breaches and inadequate IT security management
- Insolvency and bankruptcy : Decisions taken during difficult financial times
- Pollution and environmental risks : Negligence in environmental risk management
This list is incomplete, and coverage may vary from policy to policy. It is important to note that intentionally fraudulent or illegal acts are generally excluded from coverage.
Executives face increasing risks of lawsuits related to their professional responsibilities.
With Covalen, you have a partner who understands your needs. Our team is here to simplify the process and maximize your chances of success.
Directors' and officers' liability insurance protects company decision-makers against lawsuits arising from their professional decisions and actions. It covers legal defence costs and potential damages, safeguarding their personal assets.
Corporate liability insurance covers the company against damage caused to third parties. In contrast, directors' and officers' insurance protects individuals in their management functions against lawsuits related to their professional decisions.
Directors & Officers insurance is essential for company directors, officers, and senior executives, whether publicly listed, private, or not-for-profit. It is also essential for SMEs, startups, and organizations where decision-makers may be personally liable.
D&O insurance generally covers allegations of mismanagement, contested financial decisions, breaches of fiduciary duty, management errors and omissions, employment-related issues (such as discrimination or harassment), and shareholder or creditor lawsuits.