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Directors & officers liability- ForeFront Plus
Chubb Specialty Insurance

PURPOSE: To insure directors and officers (and in some cases other employees) for defence costs and legal liability incurred on account of claims and prosecutions against them in their role in the insured organisation. Also to insure them for representation costs in investigations of them by regulators and other authorities.

Key cover features

  • Additional limit for loss which law or insolvency prevents the policyholder or a subsidiary from reimbursing its insured person
  • Additional limit for defence costs (up to 10% of D&O section main limit of liability)
  • Allocation of defence costs: Chubb ‘allocates’ to covered loss, and up to the D&O section main limit, 100% of the defence costs on account of an allegation against both an insured person and that person’s organisation, if both use the same lawyers. We do not 'allocate out' the organisation’s share of the defence costs
  • Advancement of defence costs as and when incurred
  • No avoidance or rescission for misrepresentation or non-disclosure (not even for fraudulent misrepresentation or non-disclosure); cover limited only for those who knew true position or non disclosed facts
  • Court attendance and staff disruption: compensation payable to policyholder
  • Manslaughter proceedings against individuals: cover for defence costs
  • Free 6 year extended reporting period for retired insured persons
  • Extradition proceedings: full limit cover for defence costs, whichever countries are involved
  • Insured v Insured person claims not excluded, unless brought in USA or based on US law (and, even then, there is cover for defence costs and for some types of claim)
  • Emergency defence costs can be incurred without Chubb consent
  • Free consultation with well-known law firm via “ForeSight from Chubb” trouble-shooting telephone hotline (subject to time limits)

Here are a few examples of when you may need D & O cover:

A company was developing a device for preventing disease. It entered into an arrangement with a partner to sell and distribute the product. The product turned out to be ineffectual. The partner had incurred substantial set-up costs and so sued the company and its directors, alleging misrepresentation of the device’s properties.
Defence costs and damages: £326,000

Disqualification for insolvent trading
Two directors knew that their company could not realistically avoid collapsing, but carried on trading. In the last two weeks before receivership the company incurred VAT liabilities of £50,000, which were never satisfied. For this insolvent trading, the directors were at first disqualified from being company directors in the future. On appeal, the courts criticised the directors, but decided they were not incompetent enough to deserve the ban, so lifted it.
Defence costs: £100,000.

A company’s managing director was quoted in two newspaper articles as having concerns as to the propriety of the owner of one of the company’s suppliers. The owner claimed for defamation. The claim was eventually dropped, but only after insurers had funded the managing director’s defence costs.
Defence costs: £32,000

Health and safety
A managing director and several technical managers faced criminal prosecutions for alleged breaches of health and safety legislation, which resulted in the accidental deaths of two employees.
Defence costs: £890,000

Shareholder claim: abuse of position
Three friends set up a construction company, they were the company directors and they owned shares. Some years later one of the friends, in her position as shareholder, complained that the other two had breached their fiduciary duties as directors in a number of ways. These included unnecessary client entertainment expenses by attending sports events abroad; allowing friends excessive credit for building works; abuse of position and company assets to purchase other companies for themselves; and misuse of the company for work on one’s home.
Defence costs: £463,000

Dishonoured cheque
Whilst his company was in receivership, a director signed a company cheque to pay a key supplier. The cheque was dishonoured and the director was found personally liable for the amount of the cheque.

D & O cover with ForeFront will mean your defence and, if applicable, damages costs are met.