Typically, a Directors and Officers policy provides protection for all Directors and Officers of the company from the Chairman to the most junior officer.
The limit of indemnity provides for additional legal costs and expenses cover for non executive directors when the conventional limit has been exhausted and retrospective approval of ‘emergency’ costs and expenses which may have been incurred prior to notifying the claim.
The policy provides cover for the legal liability of directors or officers of the company against incurring legal costs and expenses in respect of any investigations, the defence of any legal action seeking disqualification of a director, extradition proceedings (including appeals). It also reimburses the Company where the Company is obligated to reimburse its directors and officers under the terms of its constitution.
Typically, cover will be on an Aggregate basis, with a nil excess and defence costs included within the limit chosen. As the Aggregate limit applies to the company, not to the individual directors, it is important to ensure that an adequate level of cover is purchased – remember that even if the company directors have done nothing wrong the cost of defence can extend into many hundreds of thousands of pounds and if the whole board is sued then the cost of the claim can very quickly esculate.