THE ROLE OF THE LAWYERS IN SPORTS INSURANCE POLICIES PART 4 - PICKNSTAKE.COM

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Thursday, 15 November 2018

THE ROLE OF THE LAWYERS IN SPORTS INSURANCE POLICIES PART 4

Authored by: Joshua Charalambous, Steven Aitken

Directors and officers (D&O) liability insurance

D&O insurance offers cover for company managers and directors to protect them from claims which may arise from decisions or actions that they took during the course of their employment with the policyholder and which were within the scope of their regular duties.

It is important to remember that the insurers will pay the relevant D&Os for any costs incurred in defending a claim and/or compensation that they are ordered to pay and will pay the policyholder company in the event that it has paid off a claim in order to protect the D&Os.



Put simply, D&Os make mistakes and are often personally legally liable for them. If you are reading this and are a D&O of your organisation, it is worth retrieving a copy of your D&O policy to remind yourself of what you are covered for. Most often, D&O policies cover decisions made in relation to employment or HR, shareholder actions, reporting errors, misrepresentations in prospectuses, or failure to comply with regulations or laws.

Often frauds, intentional non-compliance with regulations, and illegal remuneration or personal profit are not covered by the policy. However, D&O liability insurance is extremely topical in light of the recent allegations of corruption across the sporting industry (think FIFA).



Insurance will often respond and cover D&Os until any allegations are proven (either by admission or by a binding decision such as by the court or regulatory body). As a result, insurers will often pay out and cover defence costs incurred by the D&Os and have to seek to recover them after the D&O is found guilty of an offence. Note that the policy will not cover fines, as such cover would be contrary to public policy.



The nature and extent of individual entitlement/ expectation of cover ought to be formally documented in a contract of employment and/or applicable code of conduct. If you are a director/ officer of your organisation then it is best to find out what cover, if any, is in place.

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