Directors’ and Officers’ Insurance: Protecting you if things go wrong

Even the most experienced Directors and Senior Executives can be vulnerable when it comes to being held liable for oversights, decisions or actions taken while carrying out their regular duties on behalf of their company.

As a Director or Officer of a business, you are open to all sorts of risks so it’s important to have a comprehensive Directors & Officers Liability Insurance policy in place to protect you if things go wrong and the unexpected happens.

What is Directors’ and Officers’ Insurance?

Directors & Officers Liability Insurance (often called D&O insurance) protects Directors and Senior Executives from suffering personal loss due to allegations of mismanagement for breach of duty, negligence, error, misleading statements or omission.

A company’s Board of Directors and Officers 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.

Do I need Directors’ and Officers’ Insurance?

Directors and officers have an increased number of legal and administrative duties and there is a greater expectation that these duties should not be breached.

An appropriate insurance portfolio, which includes D&O Insurance cover, should form part of a comprehensive risk management programme designed to provide protection against the exposures the company and its Directors and Senior Executives face.

You may be accused of failing to act in the best interest of the company or providing misleading advice or failing to disclose information. Or prosecuted by a regulatory authority after a wrongful act.

Recent changes to legislation have also meant that Directors and Senior Executives must meet their obligations in relation to the Health & Safety at Work Act 2016 – the penalties and ­fines for individuals have increased and can now lead to jail sentences. Fines are not insurable when it comes to this Act.

What does Directors’ and Officers’ Insurance cover?

D&O Insurance covers the costs resulting from claims made against you as a Director or Senior Executive. It also covers damages or settlements you are ordered to pay by the courts.

Possible legal action can arise from employees, including wrongful dismissal, harassment, unfair work practices and unsafe work environments. They can also come from third parties including shareholders, bondholders, creditors, liquidators, competitors, or regulators.

How can we help?

We can advise you on the best business insurance solutions to protect you against the financial outfall of claims made against Directors and Senior Executives. However, every situation is different and warrants expert advice.

At Wayne Grayson & Associates, we believe an informed insurance decision is the right one. Whether you’re after a business or personal insurance, our expert brokers will ensure your insurance is the right fit for you.

Contact one of our Auckland-based insurance brokers for advice on the best solution to suit you or your organisation.


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