Directors’ and Officers’ Liability insurance

Directors’ and Officers’ (D&O) Liability insurance is aimed at protecting the directors and officers of a company, trust, organization, etc, against their personal liability for financial loss suffered by third parties. Whilst a company’s liability may be limited, the personal liability of a director for their wrongful act may not.

D&O policies started in USA where US shareholders had more power to make claims against directors and officers. The primary target of this policy was directors and officers of multinationals operating in relation to USA. However, over the past decade, it is becoming more and more common in Asia, especially due to the globalization of commercial and industrial businesses.

D&O policies are mainly purchased by listed companies but more and more directors and officers of SMEs are considering this policy due to the risks of their position.

Claims are mostly brought by liquidators of insolvent companies against former directors, new boards following takeover or existing boards, against officials who have proved negligent, perhaps over health and safety issues.

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