“Unlike a company’s liability, which could well be limited, the liability of directors and officers can be unlimited. Furthermore, directors defence may have to be funded personally. Uninsured directors and officers therefore face the possibility of personal bankruptcy”

RSA Insurance

Directors and Officers Liability insurance is designed to protect directors and officers from claims arising against them in the course of the performance of their duties. Director’s duties are defined by a mixture of case law and various statutes and legislation. It is no surprise that directors are sometime unaware of their duties. At law though, ignorance is no defence.

Typically, directors and officers are exposed to claims from:

  • Shareholders
  • Employees
  • Regulatory authorities
  • Customers
  • Competitors
  • Creditors

Protection can be provided under a Directors and Officers Liability insurance policy to cover the costs of defending these actions.

Key considerations

  • Financial ability to defend legal actions
  • Compliance with current legislation
  • Unlimited personal liability of directors
  • Company attitude to defending actions