Info About Insurance

Coverage: 
 

This policy provides protection to any Directors and Officers or employee of a company against legal liability for any wrongful act done in the insured capacity as Directors, Officers etc. The policy also provides for reimbursement to the company when its Directors, Officers etc. insured) has been indemnified by the company for their legal liability. 
 

On behalf of the Directors or Officer of the company the Loss arising from any claim first made against them during the period of insurance and notified during the period of insurance by reason of any Wrongful Act committed in the capacity of Director or officer of the company except for and to the extent that the company has indemnified the Directors or Officers: 
 

On behalf of the company, loss arising from any claim first made against the Directors or Officer during the period of insurance and notified to during the period of insurance by reason of any Wrongful Act committed in the capacity of Director or Officer of the Company but only when and to the extent that the Company shall be required or permitted to indemnify the Directors or Officers pursuant to the law, common or statutory, or the Memorandum and Articles of Association.  
 

The cover applies to former, present and future members of the Board of Directors and the Management comprising officers and employees in a managerial or supervisory capacity. The policy normally covers the Parent company and all subsidiaries of the Parent Company as mentioned in the Last Annual Audited accounts submitted with the Proposal form. 
 

If required to cover the Directors of newly acquired companies (through mergers, acquisitions, take-overs) or shadow Directors, the same could be noted on the policy.  The policy is designed to operate on an unnamed basis covering all directors /officers and employees of the Policyholder.  
 

• Misuse of Corporate Funds
• Mergers and Acquisitions
• False Advertising Allegations
• Bankruptcy Suits
• Companies Act Violations
• Granting Stock Options
• Customers Suit
• Actions by Creditors
• Fiduciary Responsibilities
• Conflicts of Interest
• Stockholders Suits
• Anti-trust Violations
• False Statements to Government Agencies
• Auditing & Accounting Practices
• Breach of Duty to Minority Shareholders
• Management Integrity
• Irregularities in Securities Issues
• Quality of Management
• Questionable Payments
• Questionable Practices
• Failure to Honor Employment Contracts
• Civil Rights Denial
• Misleading Representations
• Imprudent Expansion
• Inadequate Supervision
• Actions Brought by Competitors
• Financial Loss to Corporation
• Collusion to Defraud
• Public Activists Groups
• Conspiracy to Defraud

The Directors & Officers Liability insurance policy operates under two sections. 
 

1. First section shall pay the loss of each insured for a wrongful act in the insured’s capacity as a director, officer or employee of the company to the extent that the company has not indemnified the insured.
2. Second section shall pay the loss of the company for a wrongful act in the insured’s capacity as a director, officer or employee of the company but only when and to the extent that the company has indemnified the insured for the loss.

The Liability to pay may come from: 
 

Receivers, Liquidators and Administrators

• Shareholders
• Factory Inspectorate, Enforcement Directorate and Other Government Bodies
• Creditors
• Customers and Suppliers
• Employees
• Others

Claims based on or arising out of the following (including but not limited to):

• Deliberate/ willful / intentional infringement of Law
• Criminal behavior, dishonest, fraudulent acts / omissions or violation of law of the Insured.
• Loss resulting from goods or products manufactured or sold or supplied by the company.
• Any liability with the insured was or ought to have been aware of prior to policy date
• Any loss arising out of directly resulting from or in consequence of or in any actual or alleged libel, slander or any actual or alleged bodily injury, sickness, disease or death of any person or actual or alleged invasion of privacy, mental anguish, emotional distress, infringement of copyright, patent, passing off or plagiarism.
• Claims brought by any insured or the company except for employment practice claims
• Discharge or escape of pollutants
• Claim based upon or attributable to any failure or omission on the part of any Director or Officer to effect and maintain Insurance for or on behalf of the company.
• Any act or omission in the insured’s capacity as director etc of any entity other than the company.
• Gaining in fact of any profit or advantage to which the insured was not legally entitled 
• Acts committed prior to the inception date of the Policy.
• Environmental damage or pollution
• Fines, penalties and other penal liability
• Professional errors and omissions
• In a capacity as trustee or fiduciary under law (statutory or non-statutory including common) or administrator of any pension, profit sharing or employee benefits program or employee retirement or employment termination benefits , including but not limited to an actual or alleged violation of the responsibilities, obligations or duties imposed by the Employee Provident Fund Act of 1952 (India) or the Payment of Gratuity Act, 1972 (India), Employee Pensions Scheme, 1995 (India), Employee Retirement Income Security Act of 1974 (USA) or the Pensions Act 1995 (UK).

Exclusion is also designed to exclude intra-company claims such as claims emanating from the policyholder (Company) or any of the natural persons included within the term insured. The proviso to the exclusion extends cover to all cases where it can be proved that such cases fell within the categories to which the exclusion does not apply, for e.g. normally in an Employment Practice Claim, the claim would emanate from an insured (an Officer/employee) against an insured (HRD director or MD), obviously these would be covered because they fall within the proviso to the broad insured v insured exclusion. 
 

Some Definitions / Meanings: 
 

Director / Officers means and include any natural person who was or is or may hereafter be a Director or Officer of the Company or  is construed so to be within the meaning of any applicable law or regulation governing matters, and  in the event of the death or in competency of any person referred above  their estate, heirs, legal representatives or assigns  for legal liabilities incurred  due to any Wrongful Act of any person. 
 

Company includes all subsidiary companies if specifically mentioned   
 

Period of Insurance means the period mentioned in the schedule.   In the event of non renewal of the policy Directors, Officers & the Company have the right of extension of the cover granted by this policy in respect of any wrongful act committed or alleged to have been committed prior to the expiry date of this policy provided a written notice has been sent to the insurer /insurance company.  In the event of the take over are the ledger of the company period of insurance means the periods stated in the policy plus 180 days thereafter.  
 

THE DIRECTORS, OFFICERS AND COMPANY SHALL NOT HAVE BEEN RIGHT TO EXERCISE THE OPTION IN THE EVENT OF THE CANCELLATION OF THE POLICY RESULTING FROM NON PAYMENT OF THE PREMIUM  
 

Costs & expenses mean and include: 
 

• Salaries, commission, expenses or other benefits of the Directors or Officers or employees of the company.
• All reasonable and necessary fees and expenses incurred by or on behalf of the Directors or Officers resulting solely from the investigation and / or defense and / or monitoring and / or settlement of any claim and appeals.
• Cost s & expenses arising out of the prosecution of any Directors or Officers of the attendance of any Directors or the attendance of any Director or Officer at any official investigation, examination, enquiry or their proceedings ordered or commissioned by any official body or by reason of a wrongful act.
• Costs & expenses incurred by any shareholder of the company pursuing a claim during the period of insurance against any Director or Officer of the company which the company obligated to pay.

Defense Costs: 
The policy shall pay defense costs in advance of final judgment.

Extensions Available under the Policy: 
 

• Representation at Investigations and Examinations
• New Subsidiaries
• Outside Directorships
• Discovery Period
• Heirs, Estates and Legal Representatives
• Joint Property Liability