Got questions about the D&O policy?
Frequently Asked Questions
What is a D&O policy meant to cover?
- D&O insurance is there to protect the directors and officers from claims of wrongful acts in managing the company. This includes claims of breach of duty, breach of trust, neglect, error, omission, misstatement or misleading statement as part of the duty of managing the company.
- D&O insurance also offers protection to the company if:
- The company is under obligation to indemnify the directors and officers for their alleged wrongful acts in managing the company;
- The company has exposures in employment practices liability (e.g. wrongful dismissal, discrimination, harassment, deprivation of career opportunity) from its Employees;
- The Company suffers direct financial loss caused by employees' dishonesty.
What coverage does the policy provide?
It mainly covers the following aspects in respect of a claim:
- Defence costs - reasonable costs, charges, fees, expenses incurred in defending / investigating a claim. This would also include the cost / expenses arising from an investigation from an official body (e.g. MAS, MOM etc) in relation to the affairs of the company;
- The loss - the total amount which the insured becomes legally obliged to pay, including the damages, judgements and settlements.
Are company advisors covered under the policy?
Only advisors that are appointed as directors and under contract are covered by the policy.
Does the policy cover disputes with shareholders of the company that results in a lawsuit?
The policy will cover the defence and settlement costs for claims brought by any shareholder owning directly or indirectly below 15% of the voting share capital of the company or any of its associated subsidiaries.
Can I get coverage if I have a subsidiary in the USA or Canada?
What is not covered under this policy?
The following are excluded in the policy:
- Criminal acts including dishonest and fraudulent behaviour by directors and officers;
- Ongoing litigation claims brought before the inception of the policy;
- Any claims arising out of facts known prior to taking up the insurance policy;
- Claims related to breach of professional duty (that would be covered under a Professional Indemnity policy);
- Insured vs insured claim: Claims made by shareholders owning more than 15% voting share capital;
- Any claims made against the company and / or directors arising from / in connection to the insolvency of the company;
- Any claims made against the company and / or directors arising from / in connection to the investment performance / investment advice.
Please refer to the policy wordings for the complete list of exclusions and terms.
What are some examples of typical D&O claims?
- For Fintechs and other regulated startups, it is not uncommon to receive a formal enquiry or investigation from regulatory bodies such as the Monetary Authority of Singapore (MAS) in Singapore. Similarly, the Ministry of Manpower (MOM) in Singapore may issue formal enquiries or investigations into the hiring practices of companies. Once you receive a formal enquiry, you need to enlist legal advice on how to respond. This is already grounds for a D&O claim whereby the legal expenses could be covered under the policy.
- An investor may sue the founders of the startup claiming that they misrepresented the company’s financial health in order to secure the funding. The D&O policy would cover the legal costs for defending the claim and any resulting settlement.
- A disgruntled former employee files a lawsuit against the company for unfair dismissal. The policy would cover the legal costs for defending the claim and any resulting settlement.
What if I receive a claim in the future related to an event that took place before I took out the D&O cover?
The policy has an unlimited Retroactive Date. This means if a claim is reported during the time period of your active insurance cover with DUAL, the Policy will cover whenever the Wrongful Act or other conduct occurred.
When and how do I file a claim?
Who is covered by the policy?
- Directors, board members, founders, senior management and employees acting in a supervisory capacity;
- The company and its subsidiaries: for the company reimbursement, entity practices liability cover, crime due to dishonest acts of employees.
Do I have to name the directors and officers to get the policy?
The policy covers all past, present and future directors, officers and management on an unnamed basis. You do not need to declare them in order to be protected by the policy.
Does the policy cover my entity or only individuals?
- Individuals for their duties owed to the company; and
- Company / entity for the reimbursement to the directors and officers, employment practices liability, and wrongful acts other than breach of professional duty (you need a professional indemnity insurance to cover that), and crime due to dishonesty of employees.
Who needs to buy D&O insurance?
Any company that is incorporated, is selling products/services and hires employees is at risk of lawsuits and investigations for wrongful acts in managing the company.
Are the company subsidiaries covered under the D&O policy?
The policy covers the company and all its subsidiaries. The definition of a subsidiary is:
- Any entity in which the company owns or controls directly or indirectly, in any combination, more than 50% of the outstanding securities or voting rights representing the present right to vote for election of directors; or
- Any entity which is deemed to be the company's subsidiary under any applicable legislation law or accounting standard.
How much does it cost?
There are two policy limits to choose from; either S$500k or S$1m. The premium including GST for the S$500k limit is S$1,060. The premium including GST for the S$1m limit is S$1,690.