Directors & Officers (D&O) Insurance

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Directors & Officers (D&O) insurance or board of directors insurance protects the personal assets of company directors and officers against claims arising from their decisions and actions (or inactions) taken in their capacity as leaders of the organization. It covers legal costs and damages resulting from allegations of wrongful acts, such as breach of duty, misrepresentation, or mismanagement.

TLDR: D&O insurance protects leaders from personal financial risk, helps companies meet obligations, and supports good governance — making it easier to attract and retain top talent.

Purpose: In today's corporate governance landscape, directors and officers face increasing scrutiny and personal liability. D&O insurance serves two main purposes: to protect the personal wealth of these individuals from lawsuits, and to protect the company itself by covering the costs of indemnifying its directors and officers. This encourages talented individuals to take on leadership roles without undue personal financial risk.

Coverage: D&O insurance policies typically provide coverage for:

• Legal Defense Costs: Covers the expenses incurred in defending directors and officers against lawsuits, investigations, and regulatory proceedings, regardless of the outcome.
• Settlements and Judgments: Pays for damages, settlements, and judgments awarded against directors and officers in covered claims.
• Shareholder Lawsuits: Protection against claims brought by shareholders alleging financial mismanagement or breach of fiduciary duty.
• Regulatory Investigations: Covers costs associated with investigations by regulatory bodies like MAS or ACRA.
• Employment Practices Liability: Some policies include coverage for claims related to wrongful termination, discrimination, or harassment.

Use-Case: To illustrate - a tech startup’s directors make a decision that causes the company’s stock to fall. Shareholders sue for mismanagement. Without D&O insurance, the directors face huge legal and settlement costs personally. With D&O insurance, these costs are covered, protecting their personal assets.

Looking to protect your leadership team? Our expert advisors are here to help you find the right Directors & Officers insurance plan. We work with 18 trusted insurance partners in Singapore to safeguard your executives against unexpected risks.