D&O Insurance – Protecting Against Executive Liability
Key Points at a Glance
- Personal Liability Protection for Management, the Executive Board, and the Supervisory Board
- Protection Against Financial Losses Resulting from Management Errors
- Applies in cases of contributory negligence and joint and several liability
- Protects both the company and its governing bodies
- Customized coverage based on the company’s structure
Why D&O Insurance Is Essential
Executives bear far-reaching responsibilities on a daily basis. A wrong decision or a failure to take action can quickly lead to significant financial losses. In such cases, managers are liable with their personal assets, even if no personal fault can be proven.
Palatina’s D&O insurance protects the management, executive board, and supervisory board against these risks. It covers valid claims for damages and defends against unfounded claims.
What does D&O insurance cover?
The insurance covers claims made against a board member due to a breach of duty. These may include:
- Erroneous decisions or breaches of supervisory duties
- Violations of laws, bylaws, or compliance rules
- Inadequate risk monitoring or breaches of disclosure obligations
- Providing false information to shareholders or government agencies
This coverage applies to financial losses arising from these actions, both internally (with respect to the company) and externally (with respect to third parties).
Who is covered?
This protection applies to all individuals who hold management responsibilities, including the executive board, board of directors, supervisory board, advisory board, and authorized signatories. Former members of these bodies are also included.
Companies can purchase D&O insurance for their officers and directors to protect them in the event of liability claims while also safeguarding their own reputation.
Typical Claims
In practice, many D&O claims arise from:
- late filing for bankruptcy
- poor investment decisions
- breach of contract
- Violations of data protection or environmental regulations
Our Palatina analyzes such risks on a case-by-case basis and tailors the coverage to the company’s structure. This prevents management errors from becoming an existential threat.
Internal and External Liability
In the case of internal liability, the company itself asserts claims against its management—for example, if a decision has caused financial damage.
In the case of external liability, third parties, such as insolvency administrators or government agencies, file lawsuits seeking damages.
In both cases, our Palatina’s D&O insurance covers the investigation, defense, or settlement of claims—including attorneys’ fees and court costs.
Recourse and Joint and Several Liability
It is common for claims to be brought against several members of a corporate body jointly. Under Section 93 of the German Stock Corporation Act (AktG) and Section 43 of the German Limited Liability Companies Act (GmbHG), they are jointly and severally liable. This means that each is fully liable until the total damages have been paid in full.
Our Palatina’s D&O insurance protects against this financial burden, covers the insured person’s share of the costs, and ensures a fair distribution of costs.
How is the premium calculated?
The premium amount is based on revenue, industry, number of employees, and the desired coverage amount.
A precise risk analysis is essential to avoid over- or underinsurance. Our Palatina team will assist you in evaluating all relevant factors and provide you with a transparent quote.
FAQs on D&O Insurance
What is D&O insurance?
D&O stands for “Directors and Officers.” This insurance protects a company’s executive officers from personal liability in the event of a breach of duty.
Who should purchase D&O insurance?
It is recommended for limited liability companies (GmbHs), stock corporations (AGs), associations, foundations, and organizations with a management board or supervisory board.
Does D&O insurance also cover intentional acts?
No. Intent and criminal acts are generally ruled out.
How much should the coverage amount be?
It depends on the size of the company and its risk profile. Amounts between one and five million euros are typical.
Can D&O insurance take effect retroactively?
Yes, through what is known as retroactive coverage—when the loss is not discovered until later, but the incident occurred during the insured period.
Master of Laws (LL.M.)
Position: Senior Advisor, Account Manager for Corporations and Corporate Groups
Phone 06233 51190-23
mesut.bas@palatina-service.com
Position: Senior Advisor, Account Manager for Corporations and Corporate Groups
Phone 06233 51190-23
mesut.bas@palatina-service.com
Personalized advice. Individualized support.
If you ’re looking for a reliable partner for all your D&O insurance needs , Mesut Bas is here to provide expert guidance. Together, we’ll analyze your specific needs and develop tailored solutions—transparent, easy to understand, and on equal footing.
Talk to us
At Palatina, we’re committed to providing personalized service—and that starts with your very first contact. Whether you have a specific inquiry or would simply like to learn more with no obligation, we’ll take the time to address your needs and work with you to find the best way to move forward.