Directors & Officers Liability Insurance


Directors & Officers Liability Insurance


Being a Director or Officer of a company brings with it not only the stresses and strains of making
business decisions, but it also exposes the individual to enormous potential personal liability. This in
turn is leading to greater concern among Directors & Officers of Indian Corporates.
D & O policy covers for the protection of personal fortunes of Directors/Officers against the
consequences of their personal Liability arising out of unwitting ” wrongful acts “
Policy protections are meant for unwitting acts and not where the Director or Officer is aware that his
actions are dishonest or wrongful.


i. Law allows a company to indemnify the Director till he is successful in defense.
ii. Beyond that the individual is on his own.
iii. Therefore the personal fortune of the Director is at peril
iv. Insurance is therefore an effective risk transfer mechanism for this contingency.


a. Shareholders
b. Employees
c. Regulatory Bodies
d. Customers
e. Competitors
f. Members of public services
g. Creditors
h. Others (Anyone suffering a loss as a result of a breach of warranty or authority to contract)


a. All the Directors of the Insured including non-executive or shadow Directors
b. All Officers of the Insured including Managers, Company Secretary
c. Past Directors/Officers
d. New Positions created after policy inception.
e. Entity protection for employment-related matters
f. Company employment practices (Wrongful act endorsement)


Directors by virtue of their holding office in a company are subject to various obligations in the
performance of their duties, Viz.,
a. To exercise skill and care
b. To fulfill fiduciary duties
c. To comply with statutory responsibilities
d. To act and to exercise their power in good faith in the manner they consider most likely to promote the
     the best interest of the company.
e. Duty to exercise the power granted to them for the purposes for which they are granted
f.  Duty to avoid placing themselves in positions where their own interests conflict with those of the company.
g. Duty to have regard to the interest of the Company’s employees in the performance of their functions.


For your kind information.
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Susheel Agarwal

Susheel is the CEO of Ethika Insurance Broking P Ltd. This company, which has a current value of 10 million dollars, was bootstrapped by him and two of his friends. He attributes his success to his ability to inspire others to seek happiness at work.