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Corporate insurance
Directors and officers liability insurance
There are some significant personal risks in occupying leadership positions in business. Company directors and senior executives can be held accountable for the actions, or acts of omission, of the business. Company directors and officers can be held personally liable not just for their own mistakes, but also for the failings of people they relied on.
Directors and officers’ liability insurance (often called D&O insurance) is designed to protect directors, officers and employees involved in the management of a company, from personal loss resulting from legal claims made against them while they perform duties on behalf of the company.
What is directors and officers insurance?
Directors and officers liability insurance provides directors with cover for costs involved with legal action arising from them carrying out their duties. They can be personally liable for their legal obligations and cost of defending any claims.
What does directors and officers liability insurance cover?
It reimburses the costs resulting from law suits and judgments arising out of poor management decisions, employee dismissals, shareholder grievances and other acts committed in good faith. Possible legal action can arise from:
- employees - including wrongful dismissal, harassment, unfair work practices and unsafe work environments
- third parties - including shareholders, bond holders, creditors, liquidators, competitors or regulators
Who needs directors and officers liability insurance?
Directors and officers liability insurance has become essential for all business leaders. Far too few directors fully understand how accountable they are for their actions, or what the implications can be for failing to conduct business in line with their duties.
A company’s board of directors and officers are personally at risk. They are accountable for all aspects of corporate governance, including business failings, oversights or omissions. Family trusts and the company’s limited liability status may not be enough to keep a director’s home and other personal assets safe.
We can advise you on the best business insurance solutions to protect you against the financial outfall of claims made against officers and company directors. However, every director’s situation is different and warrants expert advice. Your broker can provide this guidance for you. Our brokers will work with you to create a tailored, cost-effective insurance package to safeguard you and in the event of a claim, we'll work as your advocate to get a resolution for you.
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CLAIM EXAMPLES:
Employee:
A travel adviser was about to move to an employer closer to home. The directors released his medical records to the new prospective employer and the offer of employment was withdrawn. The unhappy employee sued the directors for breach of confidentiality. The company's insurance paid out.
Shareholders:
The insured company was a small/medium sized manufacturer. The company sold a significant portion of its product to a single customer who failed to pay for the goods supplied over a period of five months. The insured’s finance director committed the company to substantial legal fees in a debt recovery vendetta against the debtor. He should have known the fees were beyond the company’s resources and ability to pay, particularly in view of the unpaid debt.
The bills from the lawyers who were engaged to pursue the debts went unpaid and they sued for their fees. As a result, the company went into liquidation. A successful claim was made by shareholders against the director concerned.
The claim was payable under the D&O insurance policy because it was established there was no dishonesty involved.
Liability solutions
Public liability
Public and product liability insurance minimises the financial impact on a business should the unexpected happen
Product liability
Product liability insurance protects against claims of personal injury or property damage caused by a business
Directors and officers liability
Directors and officers insurance protects your executives and board from personal financial risk
Statutory liability
Statutory liability insurance can protect businesses against certain unintentional breaches of New Zealand law
Employers liability
An employers liability policy protects employers against claims brought by their employees who have sustained an injury where the ACC does not provide cover
Employment disputes
Employment disputes insurance protects employers against personal grievance claims brought by past or present employees
Crime insurance
Crime and fidelity insurance protect organisations from losses which could arise from dishonest or fraudulent acts committed by employees
Professional indemnity
Professional indemnity insurance is designed for professionals who provide advice
Trustees liability
Trustees liability insurance protects trustees from personal liability while carrying out duties performed for the trust