Directors & Officers (D&O) Liability Insurance
Protect The People Who Run Your Company
Directors and senior managers can be sued personally for decisions they take on behalf of the company, by shareholders, lenders, regulators, employees or creditors. Directors & Officers (D&O) liability insurance pays their defence costs and any covered compensation, so personal savings are not put at risk for honest business decisions. MILES arranges D&O cover for listed companies, private firms, start-ups and not-for-profits, and helps boards understand exactly what the policy will and will not do.
What D&O Insurance Covers
Personal Director Protection
Pays loss of individual directors and officers when the company cannot or will not indemnify them (Side A).
Company Reimbursement
Reimburses the company when it has lawfully indemnified its directors for a covered claim (Side B).
Securities Claims Option
Entity cover for securities claims, commonly bought by listed companies and those planning to raise capital (Side C).
Defence And Investigation Costs
Legal fees for civil suits and, where the wording allows, regulatory investigations and inquiries into individuals.
Run-Off And Discovery
Options to keep cover in place for past acts after a merger, acquisition, retirement or change of control.
Emergency Cost Advancement
Defence costs are advanced as they arise, subject to repayment if the allegation later proves excluded.
What is Directors & Officers (D&O) liability insurance?
D&O liability insurance covers the personal legal liability of a company’s directors and officers for alleged wrongful acts in managing the business, such as breach of duty, misstatement, neglect or error. It pays defence costs, settlements and awards that the individuals would otherwise meet from their own pockets. The policy is bought by the company, but its first purpose is to protect people.
D&O is part of our liability insurance practice and is now routinely expected by independent directors, investors and lenders before they join or fund a board.
Who can bring a claim against a director?
Claims do not only come from shareholders. Directors and officers in India face allegations from many directions:
- Shareholders, including minority and class action claims.
- Regulators and enforcement agencies, such as securities, tax, competition and company law authorities.
- Lenders, creditors and resolution professionals during insolvency.
- Employees, over dismissals, harassment handling or unpaid dues.
- Customers, suppliers and competitors alleging misrepresentation or unfair practices.
What the policy covers
Most D&O wordings are built around three insuring clauses. Side A pays individuals directly when the company cannot indemnify them, for example because of insolvency or a legal bar. Side B reimburses the company when it has indemnified them. Side C, or entity cover, protects the company itself, typically for securities claims. Beyond these, good policies include cover for investigation costs, extradition proceedings, bail bond costs, outside directorships held at the company’s request, pollution defence costs and a discovery period if the policy is not renewed. The exact extensions differ by insurer.
What is not covered
- Proven fraud, dishonesty or deliberate breach of law, usually once established by a final judgement.
- Personal profit or advantage the individual was not legally entitled to.
- Fines and penalties that are uninsurable under Indian law.
- Prior and pending litigation known before the policy began.
- Bodily injury and property damage, which belong under commercial general liability insurance.
- Professional services to clients, which need professional indemnity insurance.
How the limit and premium are decided
Insurers look at the company’s financial health, listing status and markets, sector, debt levels, planned fundraising or acquisitions, US exposure and litigation history. The limit is chosen by the board, often benchmarked against peers and the size of the balance sheet. Start-ups raising funding often need cover in place before an investor signs. Because D&O is written on a claims-made basis, continuity of cover and the retroactive date matter a great deal when switching insurers. Private and unlisted companies are not exempt: lender actions, insolvency proceedings and regulatory notices affect them just as often as listed firms.
How MILES helps
- Prepare the proposal: we help you present financials and governance in a way underwriters understand, avoiding gaps that could later be used to deny a claim.
- Compare markets: we obtain terms from several insurers and set out limits, retentions, sub-limits and exclusions side by side.
- Review key clauses: we check severability, non-rescindability of Side A, the insolvency exclusion, the order of payments and the definition of claim.
- Manage transactions: we arrange run-off cover on mergers, acquisitions and IPOs so past acts are not left uninsured.
- Stand by at claim stage: we help directors notify circumstances early and liaise with the insurer on counsel approval and cost advancement.
What we need for a quote
- Completed D&O proposal form signed by an authorised director.
- Latest two years’ audited financial statements and annual report.
- Shareholding pattern, board composition and subsidiaries to be covered.
- Details of any US or overseas operations, listings or assets.
- Disclosure of pending litigation, regulatory notices or known circumstances.
- Existing policy schedule and retroactive date, if you already hold cover.
For people-related claims against the company itself, pair D&O with employment practices liability insurance.
Cover, exclusions and premiums depend on the insurer’s policy wording and underwriting. MILES Insurance Brokers Pvt. Ltd. is an IRDAI-licensed direct broker (Life & General, Reg. No. 954); the insurance is issued by the insurer. Insurance is the subject matter of solicitation.