What is a D & O insurance?

Info­box

~ 300 € / year

Pre­mi­ums of good D & O opti­ons

D&O insuran­ces ori­gi­na­ted in the United Sta­tes in the 1930s and have star­ted to beco­me popu­lar in Ger­ma­ny in the late 1980s. The long form is “Direc­tors and Offi­cers lia­bi­li­ty insuran­ce”, whe­re the “D” stands for direc­tors and the “O” for offi­cers. It is an insuran­ce that is direc­ted at the upper level of manage­ment, which is why it is also often cal­led a mana­ger insuran­ce.

One can think of the D&O insuran­ce as a spe­cia­li­sed, com­ple­men­ta­ry form of pro­fes­sio­nal lia­bi­li­ty insuran­ces or to be more pre­ci­se of finan­ci­al loss lia­bi­li­ty insuran­ces that a com­pa­ny takes out for its exe­cu­ti­ves.

The back­ground the­re­fo­re is near­ly iden­ti­cal to the regu­lar finan­ci­al loss lia­bi­li­ty insuran­ces, it is inten­ded to secu­re com­pa­nies and their exe­cu­ti­ves against high finan­ci­al costs. Sin­ce exe­cu­ti­ves car­ry more respon­si­bi­li­ties and their decisi­ons usual­ly have grea­ter con­se­quen­ces, this spe­cial form of lia­bi­li­ty insuran­ce was crea­ted. 

What are the benefits of a D & O insurance?

What are the bene­fits of a D&O insuran­ce?

The gene­ral bene­fits of the D&O insuran­ce are almost iden­ti­cal to tho­se of a finan­ci­al loss lia­bi­li­ty insuran­ce, in par­ti­cu­lar you buy the fol­lo­wing three cover­ages:

  • The exami­na­ti­on whe­ther the exe­cu­ti­ve is liable.
  • The defence against unju­s­ti­fied claims.
  • The pay­ment of jus­ti­fied claims.

As with most lia­bi­li­ty insuran­ces, the damages can­not have been cau­sed deli­ber­ate­ly or gross­ly negli­gent or the insuran­ce will not cover them.

The D&O insuran­ce covers finan­ci­al damages from both inter­nal and exter­nal rela­ti­ons­hips.

This means that claims are cove­r­ed by both the com­pa­ny its­elf against the exe­cu­ti­ve (inter­nal rela­ti­ons­hip) as well as claims of others such as custo­mers, sup­pliers, busi­ness part­ners, etc. (exter­nal rela­ti­ons­hips).

In addi­ti­on, the D&O insuran­ce offers two spe­cial fea­tures that other finan­ci­al los­ses lia­bi­li­ty insuran­ces (usual­ly) do not have:

  • Back­wards cover: The pos­si­ble coverage of claims that aro­se BEFORE the con­tract peri­od.
  • Exten­ded repor­ting peri­od: The pos­si­ble coverage of damages that are clai­med AFTER the expi­ra­ti­on of the con­tract.

Info­box

233.000.000 €

Total pre­mi­ums for D & Os in Ger­ma­ny in 2017 [1]

Who should get a D & O insurance?

Info­box

~ 6000 cases / year

Lia­bi­li­ty pro­cee­dings against mana­gers in Ger­ma­ny [2]

After a rather slow start in the late 1980s, the D&O insuran­ce is now stan­dard pro­ce­du­re for medi­um and lar­ge com­pa­nies in Ger­ma­ny. But even smal­ler com­pa­nies, espe­ci­al­ly in sec­tors such as con­sul­ting, IT or finan­ce, have come to appre­cia­te the bene­fits.

This is espe­ci­al­ly due to the fact that both sides bene­fit from them. The com­pa­ny is cove­r­ed when an exe­cu­ti­ve makes gross mista­kes and the mana­ger can be sure that his/her pri­va­te assets remain intact.

Of cour­se, a D&O insuran­ce only makes sen­se at a cer­tain com­pa­ny size and / or if the exe­cu­ti­ve has per­son­nel and / or asset respon­si­bi­li­ty.

Thus, the D&O insuran­ce can almost always be recom­men­ded. Con­tact us and tog­e­ther we can deter­mi­ne if and to what extent a D&O insuran­ce is sui­ta­ble for you.

Questions? We have answers.

The D & O as a stan­dard coverage for your exe­cu­ti­ves.

We will get back to you wit­hin 24 hours — wit­hout any com­mit­ment from you and in your pre­fer­red way.