Directors & Officers Liability

Directors & Officers Liability Insurance

D&O insurance protects the individual director/officer against legal costs and possible damages in defending allegations of Wrongful Acts in their capacity as a Director or Officer in the management of a company.

A Wrongful Act is usually defined as an error, mis-statement, misleading statement, conduct, omission, neglect or breach of duty.

Why do you need it?

Specific duties and responsibilities are imposed on directors as to the conduct in which they run a business. The responsibilities are imposed under contract conditions, common law and statutory legislation and in most circumstances, the individual director or officer will be held personally liable.

Duties of a director include:
-manage the company
-pay the company's expenses
-borrow money on the company's behalf and secure the repayment of that money
-act honestly
-be reasonable careful and diligent
-use information acquired through your office for the company's benefit
-use your position for the company's benefit
-disclose any interest in any contracts with the company
-state whether or not the company's profit and loss account and balance sheet give a true and fair view of the company's position
-report on and review the results of the company's operations during the relevant accounting period and any significant changes in the company's affairs during that period
-prevent the company from trading while it is insolvent
-disclose any errors or matters warranting disclosure in a prospectus
-take care to see that the company does not breach the provisions of the Trade Practices Act or Fair Trading Act; anti-discrimination legislation; occupational health & safety legislation; environmental legislation and legislation that relates to the specific industry or industries in which the company trades.

What constitutes a director or officer?

To be afforded the title of director, you occupy or act in such a position of the company regardless of how you or the company describe the position and whether or not you were validly appointed or authorised. Additionally, the company's management are accustomed to act in accordance with your directions or instructions.An officer can generally include company secretaries, executive officers and employees.

Who is covered?

Directors & Officers liability insurance covers the decisions made by people involved in managing and running an organisation. It is important to note that it covers the individuals not the company.

The people generally covered include:
past, present & future natural persons
a director, secretary or executive officer
an employee
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 covered?

damages
compensation
interest and costs
defence costs

Contact us for further information regarding D&O Insurance...