What is Directors & Officers (D&O)?
D&O (Directors & Officers) insurance covers claims made against the personal assets of company executives for alleged errors, omissions, breach of duty or misstatements in the performance of their duties, together with the related defence costs.
Under the Turkish Commercial Code (notably Article 553), board members and executives can be held personally liable for losses they cause through fault to the company, its shareholders and its creditors. Such claims may come from shareholders, creditors, employees, regulators or the company itself.
A D&O policy addresses these risks in three parts: direct protection of the executive where the company cannot indemnify (Side A), reimbursement of the company for indemnities it pays on behalf of its executives (Side B) and, in certain cases, securities claims against the company itself (Side C). It is frequently required in corporate governance, investment and IPO processes.
What is covered?
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Damages
Damages awarded and settlements for claims made against executives in connection with their duties.
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Defence costs
Lawyer fees, expert and court costs; most policies advance these while the claim is ongoing.
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Investigation costs
Representation costs of executives in investigations launched by regulatory and supervisory authorities.
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Side A – Individual protection
Direct payment to the executive where the company cannot or does not indemnify.
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Side B – Company reimbursement
Reimbursement of the company for damages and costs it assumes on behalf of its executives.
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Side C – Entity cover
Securities claims made against the company itself, as defined in the policy.
Optional extensions
- Employment practices liability (EPL)
- Extended scope for subsidiary and affiliate executives
- Outside directorship liability
- Extended reporting period for retired and departing executives
- Crisis management and reputation protection costs
Who is it for?
- Board members and managers of joint-stock and limited companies
- Listed companies and firms preparing for an IPO
- Companies and start-ups that have raised or are raising investment
- Holding structures, family businesses and executives of associations and foundations
Information needed for a quote
Sharing the following information lets us obtain fast and accurate quotes from several insurers.
- Latest annual financial statements
- Shareholding structure and subsidiary information
- Business activities and overseas operations
- Past or pending claims and lawsuits (if any)
- Requested limit and scope
Frequently asked questions
Does D&O protect the company or the executive?
D&O primarily protects the personal assets of executives. It can also cover payments the company makes on their behalf and certain entity claims defined in the policy.
Who is insured?
Typically past, present and future board members, managers and employees in managerial positions. The scope is defined in the policy and can include subsidiaries.
Does a D&O policy cover intentional acts?
No. Deliberate fraud, criminal acts and illegal personal profit are excluded once established by a final judgment. However, defence costs for lawsuits alleging such acts may be covered until the judgment becomes final.
How is the D&O premium determined?
Company size, financial position, industry, shareholding structure, overseas operations, claims history and the selected limit are the main rating factors.
Scope of cover and limits are determined by the general and special conditions of the issuing insurer.