D&O insurance provides the Company and members of its management and supervisory bodies as well as persons in charge of accounting with protection against claims related to their function. In addition to commercial companies, such insurance coverage may also be provided to persons who manage cooperatives and foundations.
Insurance coverage is triggered in the event of a claim (e.g. by a shareholder, employee, business partner or the Company itself).
The insurance protects the private property of persons serving on the company’s governing bodies. In case of misconduct claims against board members, they may be obliged to cover the costs of damages or defence costs out of their own funds.
Insurance, in accordance with the general terms and conditions, covers the costs of legal protection against a claim (also in penal proceedings) and litigation costs and provides funds to pay damages adjudged or determined in a settlement or covers administrative fines and other fines imposed on the Management Board. Protection is also provided in situations where members of the company’s governing bodies are liable for statutory obligations of the company.
Considering the increasing number of audits conducted by administration and supervisory authorities and the fines they impose on management board members (these are the most frequent claims), this contract should be a top-priority insurance in every company. A D&O insurance contract has a significant impact on the freedom to make strategic decisions at the company.