"Directors and Officers (D & O) insurance has become closely associated with broader management liabilities insurance, which covers liabilities of the corporate itself as well as the personal liabilities for the dire

Directors and officers insurance affords protection to directors and officers from liability arising from actions connected to their corporate responsibilities. The policy provides indemnity to the directors and officers in respect of Legal costs in defending proceedings brought against them alleging wrongful acts. Key reasons to buy D&O insurance are: Personal assets of directors are at risk: If a director has been accused of breaching duties, their personal assets are at risk in case they don't have any D & O insurance. Defending a legal action is an expensive affair: The legal costs and expenses in litigations involving directors are usually complex and costly. Investors can file a case: If investors believe that they have incurred losses due to mismanagement of the company, they could approach the court to seek compensation. Employees can sue: It is not only shareholders who can file a case against the directors as even employees reach the court to challenge the decision of the directors. It is a hard reality that in today's corporate world, there has been a rise in the number of cases filed by employees, related to sexual harassment or wrongful dismissal. Customers can take legal actions: In some cases, customers also reach the court against misrepresentations made in the advertisement materials and deceptive trade practices. Enquiry initiated by regulatory authorities: Regulatory bodies like SEBI, Revenue Department, etc, can initiate enquiry against directors. In case of bankruptcy or insolvency: If faced with bankruptcy, creditors can pursue legal action against directors if they think that they have not acted in their best interest. Helps in attracting/retaining talent: Not having a comprehensive D&O may discourage talented employees from joining the company as they know will not be guarded against any legal case if arise in future. D&O claims are not covered under any other policy: Most of the people believe that D&O claims are also covered under other liability insurance plans like professional indemnity.