Directors & Officers Liability
The directors and management of a company carry enormous responsibility as the leaders of the business. They are expected to make informed decisions and to carry out their fiduciary duties with due care and diligence. Any failure to fulfil these responsibilities could result in litigation against them in their personal capacity.
The directors and officers policy is unusual in that it is issued in the name of the business but the insured parties are actually the directors and senior management officials in their personal capacity.
Wrongful Acts
The policy responds to allegations of wrongful acts by the insured in their capacity as directors which are defined as:
- Breach of duty
- Error or omission
- Misstatement or misleading statement
Coverage under the D&O policy
Directors’ Liability Policy provides cover in respect of:
- Claims first made against the Insured for compensation during the period of insurance for which the Insured shall become legally liable. This includes damages, awards and approved settlements
- Claims first made against the Insured during the period of insurance for which the Insured is legally liable where the Company has indemnified the Insured. This includes damages, awards and approved settlements
- Claimants’ costs and expenses incurred by the Insured during the period of insurance with the Insurers’ written consent in the defence of any claim which is the subject of indemnity
following a Wrongful Act; where permitted by law, the advancement of costs, charges, and expenses incurred by the Insured during the period of insurance with the Insurers’ written consent for defence of allegations of any
- Criminal act
- Wilful misconduct
- Wilful breach of trust
- Reckless trading or Breach of authority where the proceedings are abandoned or exculpate the Director
Extensions of cover
These extensions are automatically included:
- Estates, Heirs and Legal Representatives
- Defamation
- New Subsidiaries
- Investigation and Inquiry Costs
And these are optional:
- Additional Excess Limit
- Aggregate Reinstatement
- Bail Bond Costs
- Bilateral Discovery Period
- Company Securities
- Crisis Communication Costs
- Deprivation of Assets Expenses
- Emergency Defence & Legal Costs
- Environmental Impairment Defence Costs
- Environmental Impairment Shareholder Derivative Claim
- Extradition Proceedings
- Major Shareholder
- Worldwide Jurisdiction
- Outside Directorships
- Prosecution Costs
- Public & Investor Relations Expenses
- Public Finance Management Act
- Retired Directors
Want to know more?
Contact usSubmit a claim?
ClaimsWhy place your D&O insurance with SHA?
Solutions
Unique, bespoke solutions carefully crafted for complex risks
Longevity
D&O claims can take many years to be discovered and then even longer to be resolved. SHA has over 35 years of experience in handling long tail, complex claims effectively.
Strength
Claims in this sector can be volatile and substantial. SHA as a division of Santam Ltd, being the largest short term insurer in southern Africa, is adequately supported to manage these exposures.Directors & Officers FAQ's
What key information is required to get a quote?
SHA only transacts business via licensed insurance brokers. A proposal form is ideal and can be downloaded here on our website. See the downloads block on this page.
Our team will also insist on the most recently audited set of financials as well as any prior claims information.
What is at risk for directors and officers?
- Personal liability: property, cars, assets, savings, pension funds
- Spouse, heirs and estates (may be named in a suit)
- Financial implications of defence costs could be catastrophic
- Should assets be frozen, the insured may not be able to cover costs of schooling, housing, utilities and personal insurance
What are typical sources of D&O claims?
Claims brought against the directors or officers of the business in their personal capacity for wrongful acts can come from many different sources. Generally claims come from the following:
Shareholders
Accounting fraud, dividend declaration, financial performance (or lack thereof), breach of fiduciary duties, inadequate disclosure, insider trading, investment/loan decisions, bankruptcy, mergers and acquisition.
Employees
Breach of contract, compensation duties, defamation, discrimination, employee benefits, employee conditions, failure to hire or promote, harassment, whistle blowing, wrongful termination.
Competitors
Anti-competitive violations, business interference, contract disputes, copyright/patent/trademark infringements.
Customers
Contract disputes, debt collection, fraud, refusal of credit.
Other parties
Liquidators/administrators/creditors/regulators/government.
Who is exposed to D&O claims?
- Past and present directors
- Employees and volunteers in a managerial/supervisory capacity, audit committee, risk committee
- President/CFO/CEO/company secretary
- Non-profit organisations: President/secretary/ treasurer
