home | about us | privacy policy | contact us

Index | Miscellaneous | Insurance for Directors

Insurance for Directors

Directors Liability Insurance is planned specially for directors and officers of a company. It serves for protecting them against claims from stockholders, employees and clients. The insurance is worked out also for covering damages and defense costs in case directors and officers are involved into litigation for wrongful acts committed within the company.

Directors Insurance usually is purchased by the company. The company offers this insurance to its officers and directors for protection of their personal assets since they can be hold responsible for acts of the company and their assets can be put under risk. In a claim situation directors cannot rely on the company indemnifying them because that would look like contravention of the Companies' Act. That is where the insurance for directors goes into effect. It will pay on behalf of the director, his legal costs, expenses awarded against him. A claim comes in case the director is perceived to have failed his duties. Among such duties are fiduciary duty - a duty to act honestly and in interest of the company and duty of care and skill - a duty to act with the care and particular knowledge and experience.