As a Director, you’re tasked with making tough and complex decisions for your company. On the one hand you need to make decisions based on what’s best for your company, and on the other you need to ensure the company remains compliant in an increasingly regulated environment.
One of the main risks to Directors is being liable for any mistakes they might make while running their companies. Directors and Officers can be personally exposed if the company isn’t able to provide indemnity or if they’re charged for failing to exercise care or due diligence in their role.
Directors and Officers liability Insurance (D&O) is important for providing protection, regardless of whether you run a small or large company. It can cover the cost of defending claims made against you as a Director, as well as damages or settlements you are legally required to pay.
Who is covered?
D&O Insurance covers directors, officers, senior management and any employee acting in a managerial or supervisory capacity.
What does D&O cover?
D&O offers peace of mind to anyone acting in a position of leadership or management knowing they’re insured against legal costs and penalties or damages that might result from a claim. D&O can cover the cost of penalties, settlements, and lawsuits arising from these kinds of events:
- Non-compliance or violation of regulatory requirements
- Not honouring contractual obligations to shareholders and creditors.
- Harassment
- Misrepresentation
- Wrongful dismissal
- Unfair treatment, environment and work practices
- Inaccurate reporting.
Do I need D&O Insurance?
While it’s not a requirement in New Zealand to have D&O Insurance, no directors or companies are immune from claims against them, so it is strongly advised that you have some kind of cover in place. On average 25% of companies have experienced a D&O claim, so having D&O Insurance provides an added layer of security and peace-of-mind against any potential legal issues that might arise.
What’s the difference between D&O Insurance and Professional Liability Insurance?
Professional Liability Insurance provides coverage for professionals rendering specialised services within the company, irrespective of their rank. D&O Insurance is for Directors or anyone acting in a position of leadership or management within the company.
What type of D&O Insurance should I get?
It’s important you choose a policy that addresses the most common risks your position is exposed to. Additional things to consider are the company’s business model and the industry your company operates in.
If you’re not sure what kind of cover is best for you, talk to one of our friendly brokers and they’ll be more than happy to help.
