A Complete Guide to Directors & Officers Liability Insurance in UAE

A Complete Guide to Directors & Officers Liability Insurance in UAE

Holding a position in the senior management of a company is never easy. As a director or a senior officer, you are in charge of multiple business chores. Amidst all these business responsibilities, it is not unlikely for diverse risks to appear, out of which claims may arise against you. In the corporate environment, where you’re one of the significant decision-makers of your organization, the claims, if not solved, may put your financial resources as well as your reputation at stake.

Directors and officers liability insurance (D&O) can protect your assets, finances, and reputation from such unexpected risk claims if you obtain the policy with suitable coverage and at the right time. To help you get a clear understanding of D&O insurance, this blog is here.

What is Directors & Officers Liability Insurance in UAE

With its diverse coverage options, directors and officers liability insurance is a useful insurance type that covers the risks of legal and financial burdens due to any of the actions or decisions of a company’s management authorities. Especially in the complex and dynamic business environment in the UAE, where the start-up ecosystem is flourishing, making a path for aspiring entrepreneurs, this D&O liability insurance becomes essential. The insurance is helpful for both the directors and their companies as well. D&O liability insurance protects the personal assets and resources of a director in case the employer’s indemnification fails for any reason. On the other hand, insurance protects the company’s balance sheet in case the company needs to indemnify its directors or others due to any claim.

 

The Key Aspects of D&O Liability Insurance Coverage

While discussing directors and officers liability insurance, it is important to highlight the scope of the insurance coverage. The coverage is broadly classified into three segments. They include:

Side A coverage:

The policy with Side A coverage provides financial protection to directors and officers when their assets, like homes, bank savings, etc., are at risk due to any claim raised, and the company is unable to indemnify them. Also, it helps to avoid personal legal costs. This coverage comes in use in cases like bankruptcy the most.

Side B coverage:

In complex regulatory frameworks in the UAE, companies often face financial setbacks while indemnifying directors and officers. In that case, Side B coverage of D&O liability insurance reimburses the indemnification costs. Thus, the coverage protects company finances and ensures that the financial resources of the company are not depleted.

Side C coverage:

When any security claim arises, Side C coverage protects the company by safeguarding it against any sort of shareholders’ lawsuits related to unethical, harmful, or illegal acts. In other words, it provides liability coverage for both the company and the directors and officers. Publicly listed companies and private companies with different scopes need this coverage to avoid significant financial loss or legal costs.

Not having proper insurance coverage may lead to severe financial burdens for directors, officers, and the company. So, it is important to understand all the coverage sides A, B, and C. and select the appropriate one.

 

Why Should You Obtain Directors and Officers Liability Insurance

When there are various instances of corporate scandals, including money laundering, bribery, and fraud worldwide, obtaining D&O liability insurance is not optional. It has become mandatory. It protects senior management and the organization from the risks of corporate manslaughter, competitor claims, shareholder actions, investor claims, non-compliance with regulations, creditor claims, issues with employment practices, etc. Overall, D&O liability insurance helps to protect the personal assets of directors and officers and company resources, gain investors’ confidence, and attract and retain employees. Therefore, you must not delay obtaining D&O liability insurance.

 

About CoverB

As a reliable insurance advisory platform in the UAE, CoverB helps to obtain a wide range of corporate insurance policies for business owners, directors, officers, and other professionals. Among various policies, directors and officers liability insurance is one of the most effective policies for the decision-makers of the company, including directors, senior officers, etc. With its team of experts, CoverB is everyone’s one-stop destination for all types of insurance needs.

 

Final Words

Whether it is a public company, a financial institution, a mid-sized private company, a non-profit, or a high-growth company, D&O liability insurance should be obtained by all types of companies. D&O liability insurance is a vital part of risk management strategy within any organization. You can also consider expanding its coverage limits and include additional benefits after negotiating with your insurer. So, considering your company’s risks, financial constraints, nature and size of business, etc., go for the best-suited directors and officers liability insurance policy.

 

If you’re looking for reliable D&O liability to protect your business, connect with our experts at CoverB today to secure the coverage you need.