The Limits of Your D&O Indemnity

directors and officers insurance

If your company is considering expanding internationally — even if it just means working with a new supplier abroad, you should consider how it will affect your D&O liability cover.

Start by reviewing your policy’s specific language to identify the limits of your cover. As you review your policy, make sure that it does these eight things to avoid gaps in your cover:

1. Specifies the differing legal requirements for each international jurisdiction, and any potential liabilities that your directors and officers may face.
2. Ensures that the director indemnification agreement clearly outlines the extent of the cover and any legal restrictions or requirements.
3. Removes or modifies any ‘presumptive indemnification’ language to ensure consistency.
4. Verifies that the provided definition of the term ‘claim’ encompasses the differing types—such as civil, criminal and regulatory—for each of the international jurisdictions.
5. Confirms that the policy covers the cost of fighting extradition.
6. Outlines your business’ compliance with the policy’s required claims notification process. Make sure you know the time limit during which you must submit the claim and any notification provisions to reduce
potential non-compliance.
7. Establishes that in the event of a claim, the directors will ideally be able to select their own defence solicitors. In the event of a conflict of interest between directors, the policy should specify how that situation should be resolved.
8. Stipulates that the wrongful acts of one insured director cannot impact the cover availability for the other presumably ‘innocent’ directors.

By ensuring your policy adheres to these eight factors, you should be sufficiently prepared to expand your business into international jurisdictions.