Third party liability insurance for members of company governing bodies

Board members are required to make important decisions that may prove to be inaccurate, which may expose the owners and the entire company to losses. Managing a company requires expertise and experience, and wrong decisions or omissions can lead to claims against directors and officers. A high level of investment, dynamic development of the company, dependence on permits and concessions, as well as on the market of supplies or sales influence the increase in the risk of claims.

Directors&Officers (D&O) insurance protects the company, members of its governing bodies and employees (performing management or supervisory functions in the Company) against claims related to the performance of their functions. The subject of the insurance is primarily third party liability of members of the governing bodies of companies, which they incur towards the company and third parties under the law. The insurance will be activated both in the case of a claim on the part of a business partner, a shareholder or an employee. It ensures that the company recovers funds lost as a result of erroneous decisions, even if the members of its governing bodies responsible for them are unable to cover their claims. In the absence of insurance, the personal assets of a member of the company’s governing bodies might not be sufficient to satisfy all claims. The policy also covers situations where a company is obliged to cover claims on behalf of a member of its governing bodies.

Scope of protection:

• covering the costs of legal defence in relation to the claims raised,
• payment of damages awarded or agreed by amicable settlement,
• protection for the company in connection with a claim under securities,
• covering the costs of the pre-trial proceedings,
• payment of compensation in cases of infringement of employees’ rights,
• protection of members of the authorities sitting in subsidiaries under one policy,
• protection in the event of liability of members of the governing bodies for the company’s public and legal obligations,
• covering fines and administrative penalties imposed on the Management Board,
• covering other additional costs, depending on the general terms and conditions of insurers offering the D&O insurance.