D&O – Civil Liability of Executives and Professionals
D&O (Directors & Officers Insurance)
Civil Liability of Administrators
1 -Why do companies hire D&O?
Management actions may create personal liability in companies. Directors and administrators make decisions which may cause third parties to file a lawsuit
Lawsuits filed by shareholders represent nearly half of all lawsuits of Civil Liability of Directors and Administrators.
Employees are one of the fastest-growing litigation sources, and any company face the challenge to cope with them. This exposure to loss has increased due to laws which protect them. When a company faces economic concerns, a lot of different groups may be affected or may want some notably damaging attitude to be punished. Employees, clients, salespeople, local governments or government offices may all feel, directly or indirectly, some effect due to a company facing financial problems.
And when a lawsuit is filed, directors and administrators must defend themselves. The costs arising from that can be awfully high.
That is why the Civil Liability of Executives Insurance has been developed, to cover not only costs of defense but also indemnities.
2 -Who can be insured?
The directors and administrators of the present management and previous management of a corporation and its subsidiaries as well as managers, supervisors and all and any collaborators whose jobs allow them to make decisions.
3 -Management Actions covered by D&O
A typical policy of Civil Liability of Directors and Administrators can be extended to an Error and Omission of Management Policy.
A typical policy protects directors and administrators from a variety of management actions made during the exercise of their functions in the corporation.
Daily decisions affecting employees, associations, clients, groups of consumers, competitors, suppliers and other contractors may result in lawsuits which claim false or misleading information, negligence or breach of duty.
Effectively, any decision made by a director or administrator could possibly result in lawsuits against directors and administrators.
4 -Types of damages covered:
- Lawsuits filed against administrators in any sphere, including criminal;
- Investigations against administrators;
- Cost of defense;
- Pecuniary Compensation;
- Statutory Responsibility;
- Coverage for Past Management;
- Spouse, heirs, successors and legal representatives;
- Executives of affiliated companies and non-profit organizations;
- Unlimited retroactivity for facts taking place before contracting, providing they are known;
- Coverage for lawyers and proxies of the company;
- Environmental, body and moral damage;
- Asset freeze/asset block/on-line attachment;
- Taker against policyholder;
- Errors and omissions on quality of provided service;
- Advertising and image protection costs;
- Coverage for operations with securities, when applicable;
5 - Defense costs of a claim:
A good insurance policy of Civil Liability of Directors and Administrators pay the defense costs as they occur.
Besides, the practice of defense cost advance is one of the advantages of this insurance.
The fact that lawsuits against Directors and Administrators last more than five years on average makes for a meaningful financial benefit for the insured.
This protection of cash flow of an insured is important for all operations.
Professional Civil Liability
It refunds the insured amounts he is civilly liable for, for losses or damages to third parties resulting from professional failures.
Liability created for those who offer specialized services to the general public.
Lawsuits have frequently been filed against professionals, such as doctors, lawyers and engineers, due to omission or negligence on the job.
It is intended for professionals such as doctors, lawyers, customs agents among others.