What is Directors and Officers/ Management Liability Insurance?
Within a business, senior management and executives may make honourable decisions and actions. However, mistakes can still happen. Directors and officers (D&O) Insurance is an insurance policy designed to protect business owners and senior members of management involved in decision-making, action or inaction within an organisation while they perform their duties as leaders of a company.
Management Liability Insurance is a packaged policy and is designed specifically for SMEs to protect individual directors and officers, as well as the company, in relation to the exposures of managing a company.
The key elements of ML cover include:
- Directors & Officers Liability
- Company Reimbursement
- Employment Practices Liability
- Statutory Liability
- Trustees Liability
- Internet Liability
- Kidnap, Ransom & Extortion
Why is D&O important?
D&O insurance is important as it protects the interests of senior management, executives and directors where they have acted improperly or made an error in judgement, business failings, oversight, or omission. Director's and officer's insurance protects the personal assets of business owners and managers, as they are personally liable for any decision, action or inaction they make within the business.
What does D&O cover?
D&O insurance provides peace of mind for senior management, executives and directors, knowing they’re insured against legal costs as well as any penalties or damages that may result from a claim or investigation. The insurance reimburses the costs of lawsuits, settlements, penalties and judgments arising from the following events:
- Wrongful dismissal/ Illegal termination
- Unfair treatment, work environment, and work practices
- Inaccurate reporting
- Non-compliance, violation of regulatory requirements
- Not honouring contractual obligations to shareholders, creditors, liquidators, etc.
Insurance Advisernet is here to provide protection and comfort for the leaders of the company. We can advise you of the best insurance solutions to manage any financial and legal burden out of claims made against the directors and officers Our authorised representatives can help tailor-fit a policy that will cover those risks. Schedule a call today!
Frequently Asked Questions
What type of D&O insurance Should I Buy in New Zealand?
All organisations are vulnerable to D&O claims. If you have to obtain one, choose a policy that addresses the most common risks your leadership is exposed to. You can also consider the business model, industry, and budget allocated for paying the premium.
Do I need D&O Insurance?
D&O Insurance is not required in New Zealand but is strongly advised to have. In the past decade, one in four surveyed companies has experienced a D&O claim. Regardless of if you’re a private or public company, all the more if you’re an SME or a non-profit organisation, buying D&O insurance provides an added layer of security against potential legal issues that may arise in the future.
Is D&O Insurance the same as Professional Liability?
D&O Insurance provides protection for management roles within the organisation. On the other hand, a professional liability provides coverage for professionals rendering specialised services within the company, irrespective of rank.