Directors and Officers Indemnity Insurance Information
What is Directors an Officers Indemnity Insurance?
Directors and Officers Indemnity insurance protects Directors & Officers for legal liability they may incur personally in managing a corporation. Directors & Officers may be exposed to claims brought against them by:
» Shareholders (ie. statutory derivative actions)
» Employees (ie. claims for wrongful dismissal, harassment or wrongful failure to employ or promote)
» Statutory bodies (ie. actions brought by the Australian Securities and Investments Commission involving alleged breaches of a directors fiduciary duties or investigations commenced by WorkCover following a work incident)
» Competitors (ie. allegations of conduct involving anti competitive behaviour)
» The Corporation itself (ie. actions brought by a liquidator on behalf of the company alleging insolvent trading)
A Directors & Officers policy will generally cover the following in relation to the above actions:
» Representation costs where a Director or Officer is legally required to attend an inquiry or investigation in relation to the affairs of the corporation
» Legal costs & expenses in the defence & investigation of a Directors & Officers claim
» Any compensation required to be paid by the insured in order to dispose of a Directors & Officers claim
Who needs Directors and Officers Indemnity Insurance?
You should consider Director & Officers Insurance if you sit on the board of an incorporated entity. This includes private companies, incorporated associations, public companies and co-operatives.
Important Tips
Not all liabilities incurred by a Director or Officer an indemnifiable by the company itself. For example a company is not lawfully able to indemnify a Director or Officer for a liability (other than for legal costs) incurred under a compensation order under s.1317H of the Corporation Act 2001. A Directors & Officers insurance policy does not have the same indemnity restrictions and may afford cover where the company cannot.
A Director of Officer may still be exposed to claims even if it is found the Director or Officer did indeed act honestly. The fiduciary duty of a Director or Officer to act in good faith and in the best interests of the company creates a higher benchmark than simply acting honestly.
More Information
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For further information or a quotation on Directors & Officers insurance you can contact one of our experienced brokers on 02 8814 7777 or toll free on 1-3000-COVER.