Directors & Officers Liability Insurance


The corporate environment has become global with interconnected supply chains and growing compliance requirements. The Executives of a company, the Board of Directors (BoD), or even the Directors face responsibilities that they did not have in the past. As a result, the Directors, the Board, and business executives must be covered against the company, employees, customers, suppliers, society, shareholders, and generally all stakeholders directly or indirectly with the corporate. Directors and Officers Liability Insurance, or as it is known in the business sector, D&O Liability Insurance, protects the members of the Board, the executives and the directors of a company.

Directors & Officers Liability Insurance mainly protects the members of the board of directors, directors and executives of a company (natural persons), against claims that may be raised against them by third parties (official authorities – shareholders – employees – traders, etc.) alleging that they caused them financial or moral damage in the context of decision-making, administrative duties or non-compliance with their obligations as they should have.

The Board of Directors, the executives and the directors of a company, have the following duties:

  • The observance of the law, the statute and the legal decisions of the General Assembly (GS).
  • The obligation to always act for the Corporate Interest of the company in which they work.
  • They have the collective duty to ensure that the annual financial statements are prepared and published in accordance with the provisions of the law.
  • The responsibility to inform the stakeholders about any of their decisions, as well as to inform them in a timely manner about the current situation of the company.

Moreover, the members of the Board have the following responsibilities:

  • Liability to the Company.
  • Liability to any third party (eg employees, public, etc.).
  • Civil and / or Criminal Liability.

The legal entity is responsible for the acts or omissions of the members of the Board of Directors, the executives and the directors if:

  • The act was carried out during the performance of the tasks assigned to them.
  • The acts are culpable and illegal.
  • The transaction creates an obligation for compensation.

The responsibilities and duties of the above groups, as we have seen, are many and in case an error occurs and an investigation or even legal protection is needed, the respective employer is not obliged to bear the financial costs for the manager. As a result, the manager will bear all the costs himself, which may be high. Defending against lawsuits and accusations, even unfounded ones, can prove to be a very time-consuming and stressful process. A negative outcome and a dismissal can have serious implications for career prospects, while appeals will only prolong the wait and uncertainty. Meanwhile, the immediate financial consequences of the loss of income or assets and their impact on daily life can be devastating.

In such a demanding environment in which companies operate nowadays, it is possible for errors, omissions, losses or mismanagement, violations of existing legislation and / or labor regulations, violation of the company’s articles of association. These are just a few examples of misconduct by executives, BoD. and / or the directors of a business. It is understood that such actions can affect a company and the above groups individually. With Directors & Officers Liability Insurance, the financial cost of these losses can be covered by an insurance company.

“In Total” responsible

The members of the Board are liable “in total” if it turns out that the representatives of an S.A company with their culpable acts they caused the tortious liability of the company, then they can also be defendants together with the company and be responsible for the plaintiff’s compensation jointly and in total.

Criminal Provisions:

  • Violations of Board members
  • Violations related to the smooth operation of the company.
  • False or misleading statements to the public.
  • Violations related to the General Assembly

Basic coverages of a Directors & Officers contract:

  • Coverage of the responsibility of the board of directors (directors and executives) of the company, against claims of third parties such as: authorities, traders, shareholders, employees, customers, due to: decisions – errors – omissions during the performance of their duties.
  • Protection of the company’s balance sheet.
  • Protection of the personal property of:
    1. Members of the Board
    2. Executives
    3. Directors
  • Facilitate companies to more easily absorb financial losses without adversely affecting their profits.
  • Protection of the interests of the shareholders but also the personal property of the executives.
  • Protection of executives from insecurity about their future while they are in office.
  • Safer business development if measures have been taken against potential risks.
  • The awarded monetary compensation is covered.
  • The monetary amount of the claim.
  • Defense costs are covered.
  • Research costs are covered.

Who should have a D&O Liability Insurance contract:

  • Private companies.
  • Public companies.
  • Companies listed on the Stock Exchange (Greece & Abroad).
  • Financial Institutions.
  • Multinational companies.
  • Charities.
  • Non-Profit Organisations.

Expenses covered by D&O Insurance:

  • Out-of-court settlement amounts.
  • Amounts to be adjudicated as monetary compensation.
  • Defense and investigation costs.
  • Loss of money due to employee infidelity.
  • Legal support costs.
  • Company Responsibility.
  • Loss of Money.
  • Personal Accident.
  • The loss of money due to the burglary of the business or during their transfer.

Company’s liability, loss of money and personal accident are optional coverages and the assured has the option of whether or not to add them to the contract.

Reasons required for Management Insurance – D&O Insurance

  1. covers lawsuits caused by the effects of the global financial crisis
  2. protects executives from mergers and acquisitions
  3. serves to attract more capable executives who can take positions of high responsibility
  4. protects executives from staff cuts, pay cuts, discrimination which may result in employee claims on executives
  5. provides coverage to executives regarding the company’s activities abroad
  6. covers executives from the strictest and most regular audits by Regulators / Supervisors on corporate transparency required
  7. regarding the Liability of a Legal Entity towards third parties, the theory is followed according to which the action of the bodies of the legal entity is an action of the legal entity itself. The Civil Code (CC) stipulates that the injured party is liable to him and the legal entity.
  8. the responsibilities of the Board members are increased with the new Law for S.A companies.

Expenses NOT Covered with D&O Liability:

  • Personal Benefit of executives.
  • Willful misconduct.
  • Allowances, Bonus, Dismissal Compensation.
  • Injuries.
  • Material damages.
  • Professional Responsibility.
  • Pollution.
  • Known Claims, Known Facts, Previous Trials.
  • Embezzlement of BoD, Executives, Directors (Only Embezzlement of Employees is covered).

Indicative examples of covered claims in D&O Liability Insurance:

  1. Claims of shareholders for concluding loans with unfavorable terms or for acquisition that caused damage to the company or for a claim against the Management for improper performance of duties.
  2. Claims for compensation of representatives – suppliers from termination of cooperation.
  3. Claim for customer compensation for deception.
  4. Claims for compensation from a competitor for abuse of a favorable market position or for defamation.
  5. Legal protection to deal with an investigation by prosecutors for illegal practices (excluding possible fines and penalties to be imposed).
  6. Employee claims for sexual harassment, unfair dismissal or discrimination

For further information regarding D&O Liability Insurance Contact us

Errors & Omissions Insurance:

Another type of Liability insurance policy is that of ‘Errors & Omissions’. Such policies are primarily aimed at companies that have technicians and freelancers (technicians) who can cause damage to third parties due to an error or omission through their job. In the event of a customer holds the company responsible for a service provided or failed to provide which did not have the desired/ promised results, the insurance policy which covers the company can indemnify the third damaged party. An E&O policy typically covers defense costs, judgments and settlements. Even if the claim has no grounds, it can take thousands of Euros to defend against a lawsuit. Although many larger companies have the resources to fight legal actions, many medium – to – small businesses don’t have financial abilities. One lawsuit could bankrupt a business.

Contact us for further information.

Management Liability Insurance:

Liability insurance of management companies has much in common with Directors and Officers (D & O) liability insurance, but it is mainly addressed to companies that are engaged in management and provides coverage to the company’s executives as well as the company itself, from possible legal third party claims.

Contact us for further information.