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Directors and Officers’ Insurance Policies

  • Adroit Insurance and Risk
  • February 23, 2015

Are you a manager or director of a company? Sean Mackay runs through why directors and officers insurance is a good thing for your peace of mind

Directors and officers insurance policies offer liability cover for company managers to protect them from claims that may arise from the decisions and actions taken within the scope of their regular duties.

Quite simply, managers can make mistakes and are often personally legally liable for them. They walk a fine line making tough and complex decisions with huge impacts on the basis of available and at times limited information, for example in merger and acquisition situations.

A company needs to ensure that its directors and officers have the room to make decisions. Directors and officers insurance supports good corporate governance by making the risks of these decisions manageable and transparent.

In cases where a company goes bankrupt, the insurance cover is often one of its few assets, providing the company, its shareholders or its creditors with a way to recapture some part of that loss.

No matter how prudently they act, and how strong their business acumen, any managers’ decision that can result in losses for the company, or a third party can lead to costly litigation.

Directors and officers insurance should be on top of the lists for all small and large businesses so to secure the personal assets of the directors and provide a peace of mind in the case of a serious breach.

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