Any executive function bears not only successes, but also risks as well. You make important decisions on a daily basis, creating an environment of ever-stricter liability foundations and claims mentalities.
The media are reporting almost daily about at times spectacular cases, where those responsible are asked to compensate.
The smallest bit of carelessness – including on your employees’ part – can place the company’s assets, your clients’ assets and in particular, your personal assets at risk! The burden of proof is reversed here, i.e. the manager has to exonerate himself. Any assumption of fault might already trigger a duty to compensate.
For: Top managers and board members are liable without limitation with their personal assets for any culpable breach of corporate responsibilities.
Protect your existence by taking out D&O insurance cover.
D&O (directors and officers liability insurance) has several coverage aspects:
- Reviewing liability issues and defense against unjustified claims
- Assumption of attorney’s and court costs (defense and legal protection function)
- Satisfaction of justified claims (damage compensation function) – including out of court
The manager’s private assets as well as the corporate assets are protected and so is – not to be forgotten – the reputation.
Board members of legal entities (members of executive, supervisory, administrative boards; managing directors of GmbHs, advisory board members) as well as officers. Their spouses or heirs are usually co-insured. Modern D&O concepts also provide coverage e.g. for compliance and/or data protection officers. As a matter of principle, all board members should be covered. Upon request, external mandates in minority participations may also be co-insured.