Think for example about the following situations:
- Increasing regulation and the focus on corporate governance means more and more obligations rest on your shoulders.
- Management structures are becoming flatter, increasing the degree of individual liability and the likelihood of various forms of legal action against you.
- The expansion of world trade and internationalisation means that as a director or manager you are being confronted by the local legislation of every country to which your company sells its products or services.
- The number of mergers and acquisitions is rising quickly: directors and managers need to protect themselves properly during the sale and purchase of companies.
A directors & officers policy or director’s liability insurance covers the legal costs for defence in a legal action against a director. The policy also covers the director’s civil liability resulting from claims with regard to financial losses. Without cover, directors can be required to pay for these costs from their own resources.
The policy can be extended with the following covers:
- liability with regard to employment practice errors protects directors and employees in cases of claims for damages for discrimination in the workplace, wrongful dismissal or suspected sexual harassment.
- entity cover protects your company for legal action with regard to stocks and shares.
- liability of management companies: in Belgium, director’s mandates are often covered by a management company. This extension means that these legal entities are protected under the director’s liability policy, even when legal action is being taken against them without their physical representative.
- A separate Management Company Protector policy exists for the management company, which incorporates all insurable liability risks: professional indemnity, civil liability for commercial operations, employment liability and director’s liability.