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DIRECTORS AND OFFICERS LIABILITY INSURANCE

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Breach of duty
D&O Insurance covers Directors and Officers, as they are liable, even through their personal property against third parties' claims (or even their own Company) for errors or oversights occurring during the execution of their duties.

 

To whom does D&O apply?
D & Ο Insurance applies to Directors and Executive Officers of the following Organisations and Businesses:

  1. Private Companies
  2. Companies listed in the Stock Exchange
  3. Investment Companies
  4. Financial Institutions
  5. Non-Profit Foundations
  6. Charity Institutions
  7. International Companies (based anywhere in the world)

Reasons why D&O Insurance is necessary
Protection of the Company members against:

  1. the increased and stricter Regulatory / Supervising Authorities Audits with reference to corporate transparency and the behaviour of Executives
  2. the repercussions of the global financial crisis, resulting in bankruptcy, leading to law suits against Directors & Officers
  3. the expansive activities overseas (Global Economy)
  4. the increase of mergers and take-overs
  5. the cut backs in staff, salary reductions, discriminations causing increasing claims by employees, but also third parties, such as minority shareholders against Directors.
  6. attracting the top Executive around to high-ranking positions

Who can claim against a director or an officer of a Company ?
Shareholders
Usual reasons concern mismanagement, errors, oversights, waste, breach of duty, financial misguidance, a drop in the share price, incorrect assessment of take-overs and mergers, company bankruptcy

Official Authorities
The strictest legal frame on Directors and Officers liability has led to more frequent and stricter "official investigations" by State or professional & commercial Regulatory Authorities.

Workers / Employees
Due to biased discrimination, illegal dismissal, breach of work regulations or contract terms, denial of salary raise and promotion or sexual harassment

Clients, Providers, Competitors
For illegal conduct, refusal to abide by agreements, use of illegal promotional methods of products/services, violation of copyright regulations, exploitation of "classified" commercial information.

Lenders and other third parties involved
For not adhering to agreements or violating agreements, falsification of financial records

What does D&O Insurance cover?
D&O Insurance covers :

  1. The expenses/ fees of external advisors for the investigation of the claim
  2. The Legal Defence expenses
  3. The Out-of-Court Settlement or
  4. The Compensation of Court Decisions

Basic covers & extensions of D&O Insurance

  • Worldwide coverage
  • Insuring an executive against inability to receive compensation from the company itself
  • Payment of defence expenses according to the development of the claim defence
  • Automatic broad coverage of legal expenses to prevent and best deal with possible claims (audit, enquiries, etc.)
  • Coverage of the present, and stepping down directors
  • Claims of an Insured against another Insured.
  • Coverage for claims based from Labour Practice
  • Automatic coverage of new subsidiaries
  • Additional cover limit for non-Executive members of staff
  • Broad definition of Insured Person, as well as extension for Outside Directorship Executives
  • Defence expenses for claims arising from pollutions
  • Fines and penalties (provided they are insurable by Law
  • Coverage of legal expenses
  • Automatic insurance of subsidiary companies' executives, however recently acquired
  • Insurance of executives transferred to other companies
  • Coverage of Director's responsibility (failure to supervise subordinates)

Βasic exceptions:

  • Pre-existing and current legal battles 
  • Damages noted on previous Insurance Policies or that have taken place before the retroactive-date
  • Fraudulent acts (the exception is only valid if there is a final Court decision or admission by the Insured.
  • Profit or illegal financial gain (the exception is only valid if there is a final Court decision or admission by the Insured)
  • Pollution (Court expenses are covered)
  • Damages from Death/ Bodily Injury & property damage

D&O Insurance evaluation criteria

  • Financial statements
  • Type of company (Public, private, ιδιωτική, listed on the Stock Exchange, etc.)
  • Damages track record
  • Years of operation
  • shareholders
  • Extent of coverage
  • Country & Field of activity
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