What is d&o insurance?
D&O (directors & officers) insurance is civil liability insurance that protects members of the board of directors of a company, and the people in the company who have management positions addressas advisors or directors and whose decisions affect the company vis-à-vis third parties.
Responsibility comes with grade, so you need a good foundation on a protected base.
Any member of a shareholders meeting, boards of directors, senior management of all types of companies, administrators of associations and foundations, need to be insured against possible claims.
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Advantages of taking out D&O Insurance
Protection
Faced with claims or setbacks in the normal development of the activity.
Peace of mind
In the event of possible claims subject to liability charges.
Legal security
To be able to deal with claims that can be made both from outside and from within the organization itself.
Important Coverages for D&O Insurance
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This coverage covers costs associated with a trustee's legal defense in the event of a lawsuit or claim. This includes the costs of attorneys, experts, and other expenses related to defending a lawsuit.
This coverage covers the cost of establishing a bond if it is required in a legal process. For example, if a trustee is sued and a bond is required to ensure payment of any future compensation, the insurance policy will cover this cost.
This coverage covers compensation that may be paid in the event of a lawsuit or claim. Awards may include damages, compensation for lost wages, and other costs related to the lawsuit.
This coverage covers costs related to a claim for illegal employment practices, such as harassment, discrimination, or unpaid wages. Includes legal expenses and compensation.
This coverage covers sanctions imposed by administrative authorities in case of non-compliance with laws and regulations. For example, if a company is fined for failing to comply with environmental regulations, the insurance policy will cover this cost.
This coverage covers the liability of the directors for the company's tax debts. In the event that the company is unable to pay its tax debts, the directors may be responsible for covering these debts.
This coverage covers the liability of the administrators in the event of bankruptcy. In this case, the directors may be responsible for meeting the company's obligations to its creditors.
This coverage covers the criminal liability of directors in cases related to the company. For example, if a director is accused of fraud or financial crimes in the context of their role, this cover will cover legal costs and compensation.
This coverage covers managers' liability for illegal labor practices. For example, if a manager is found responsible for allowing or ignoring illegal employment practices, such as harassment or discrimination, this coverage will cover legal costs and compensation.
Environmental Damage Coverage: This coverage covers damages and costs associated with pollution or environmental damage caused by the business. For example, if an oil spill or toxic spill is caused by the company, this coverage will cover cleanup costs and any compensation to affected parties.
Frequently asked questions about directors and officers insurance
Is D&O insurance the same as directors and executives insurance?
Why should I purchase D&O insurance?
Where are these responsibilities regulated?
- Capital Companies Law – reform 12/2014 expands the responsibility of directors
- Civil Code
- Concursal law
- Penal Code - reform 2010 and subsequent
Who can claim me?
- Shareholders
- Staff
- Creditors and suppliers
- Clients
- Competitors
- The society
- Public organisms
What decisions can a manager make that are susceptible to being complained about?
Managers have to make a series of decisions every day that can compromise the well-being of their company.
Comply with the Bylaws, invest or divest, hire all the corresponding security measures, open or close factories, international expansion, debt management.
It does not matter in which sector they carry out their activity or if the claim has a real basis or not.
A claim can ruin years of work and the reputation of the company and its administrators and managers.
What are the exclusions in insurance for directors and administrators?
- Bodily injury, illness or death of a person.
- Losses and damages related to the normal operation of the company.
- Material damage.
- Intentional or malicious acts
- Fines and sanctions of any type, except those included in the guarantee of administrative sanctions and their limits.
Am I covered if I leave the company?
Directors and administrators remain responsible for their management actions for 4 years following their dismissal, resignation, retirement or death. Most policies on the market provide coverage even if the policy is not renewed.
Is this type of insurance mandatory?
In Spain, there is no legal obligation to ensure the civil liability of directors and administrators. Therefore, insurance for directors and administrators is voluntary, although it is recommended to have one.
Do you need D&O insurance?
If you want to find the D&O insurance that best suits your company and budget, we recommend contacting our expert insurance advisors.
