Directors and Officers Liability Insurance
Protect Your Personal Assets!
As a director, commissioner, supervisor, or CEO, you make decisions that can have a significant impact on your company, employees, and other stakeholders. Unfortunately, some decisions can go wrong, possibly leading to personal liability, especially in cases of bankruptcy.
With Directors and Officers Liability Insurance, you protect yourself against these risks.
What is Directors & Officers Liability Insurance?
Directors & Officers Liability Insurance protects you as a director, commissioner, supervisor, or CEO of a company, foundation, association, or organization against personal liability. You can be held personally liable for decisions, even if they were made by others. This applies even after you have left your position.
This can lead to significant costs and serious financial consequences for your personal assets. With D&O Insurance, you are covered against these risks and receive legal support in lawsuits and claims arising from your role. It is an essential insurance for anyone with managerial responsibility.
What does Directors & Officers Liability Insurance cover?
- Compensation for Claims
- Legal Assistance
- Investigation Costs
- Damage to the Legal Entity
- Personal Protection
- Professional Support
It is important to know that coverage can vary depending on the insurer. Therefore, it is wise to carefully review the policy terms.
What does Directors & Officers Liability Insurance not cover?
- Damage caused by intent, fraud, deception, or misrepresentation
- Liability arising from criminal offenses
- Fines, penalties, or other imposed sanctions
- Claims linked to pre-existing circumstances
- Liability for environmental damage
- Actions beyond the director’s legal or contractual authority
- Damage resulting from gross negligence
- Claims by the company itself against its own director
- Damage arising from changes in laws or regulations
Examples of situations where you could be held liable:
- Insufficient Management of the Permit Process
A solar park developer starts construction of a park without all the necessary permits. This leads to legal disputes and delays, resulting in significant financial losses. Board members can be held liable for mismanaging the permit process.
- Insufficient Supplier Control
A company that operates solar parks signs a contract with a supplier for the delivery of solar panels. However, the supplier fails to deliver on time, and the quality of the delivered panels is substandard, leading to reduced energy output and financial losses. The directors can be held liable for failing to properly vet the reliability of the supplier and the quality of the panels.
Why is Directors & Officers Liability Insurance important?
As a director, you make important decisions that can have major consequences. Sometimes, these decisions can lead to damage, for example, due to a poor investment. If others hold you liable for this, you may have to pay the costs out of your own pocket.
Directors & Officers Liability Insurance ensures that you are protected against such claims. It is an essential protection for anyone with managerial responsibility within a company, foundation, or association.
Who is Directors & Officers Liability Insurance for?
This insurance provides coverage for:
What Other Insurances are Often Purchased besides Directors & Officers Liability Insurance?
In addition to D&O Insurance, the following insurances are often taken out:
What to Do After a Loss?
- Record the date and time of the incident.
- Report the damage as soon as possible.
- Take measures to prevent further damage.
- Keep receipts for the costs of any measures.
- Do not dispose of damaged parts until they have been cleared by the insurer.
- Take clear photos of the damage.
To report a claim or for more information on the next steps, visit our informative claim reporting page. Learn more about reporting claims!
What Our Clients Say About Us
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Do you want to take out Directors & Officers liability insurance?
Frequently Asked Questions
As a director or supervisor of a legal entity (such as a B.V. or N.V.), you can be held personally liable for the debts of the organization. Usually, the legal entity itself is responsible, but in some situations, liability may also fall on you as a director.
There are two types of liability:
External Liability:
This occurs when third parties, such as creditors, employees, the Tax Authorities, or a bankruptcy trustee, hold you personally liable.
Internal Liability:
This comes into play when the legal entity itself, for example after a change of management, believes that you have not acted properly. In such cases, you can also be held personally liable.
Additionally, there is increased liability in the event of bankruptcy, especially if you fail to meet your bookkeeping obligations. Mergers and demergers can also pose risks due to complex and rapid decision-making, which may have significant consequences.
Important to know:
It does not matter whether you hold a paid position, act as an interim director or perform director duties as a volunteer – the risks remain the same.
No, the costs of legal defence in case of directors’ liability are not covered by a regular business legal expenses insurance. A Directors and Officers Liability Insurance, on the other hand, does provide cover for legal costs and damages arising from personal liability of directors.
The board often consists of multiple people. If damage occurs due to a managerial error, each board member can be held liable for the entire amount of damage. This means that as a board member, you are also responsible for the mistakes of your fellow board members. With D&O Insurance, you protect yourself and your fellow board members from liability that could otherwise affect your personal assets.
As a director, you can be held liable in two ways: internally and externally.
Internal
Internal directors’ liability arises when the legal entity (such as an LLC) holds you responsible for damage due to a managerial error. This happens only in cases of ‘gross negligence.’ For example, if you seriously neglect the administration and thereby cause the company to run into problems.
External
External directors’ liability means that you can be held personally liable by third parties. This can happen if you do not perform your duties properly and the organization goes bankrupt as a result.
You take out Directors & Officers Liability Insurance as a company, foundation, association, or organization.
Here are the differences:
Professional Liability Insurance
In certain professions, you may cause financial damage to a client, for example, due to a design error or incorrect financial advice. A professional liability insurance policy covers this type of damage.
Business Liability Insurance
When others suffer injury or material damage due to your products or activities, you are liable for it. The damage resulting from this is covered by business liability insurance.
Directors & Officers Liability Insurance
As a director, commissioner, or supervisor, you can be held personally liable for damage resulting from your decisions. You must compensate this damage yourself. Directors & Officers Liability Insurance covers this type of damage.
Yes, your personal assets are protected in the event of wrong decisions. You do not have to compensate financial damage resulting from directors’ liability out of your own funds. Note: there are exceptions, such as damage caused by misuse of your role as a director. Please refer to the policy terms for more detailed information.
No, a personal liability insurance policy does not cover liability arising from your role as a director. To protect yourself against directors’ liability, you need a specific Directors & Officers Liability Insurance policy.
Contact us immediately. We will assist you with the claim handling and ensure the right support. To report a loss or for more information on the next steps, visit our informative page on reporting a loss. Learn more about reporting a loss!
Yes, this insurance is also important for small companies. The risk of personal liability always exists, regardless of the size of the company.
No, Directors & Officers Liability Insurance is not mandatory, but it is strongly recommended for anyone in a managerial or leadership position because anyone can make a wrong decision.
