Directors and Officers (D&Os) of companies in the mining industry can be faced with a wide range of legal exposures arising from their duties to the corporation. For example, they owe a duty to manage the corporation, a duty to act in the corporation’s best interests, and a duty to exercise care and skill.
Having a Directors & Officers insurance policy in place can cover financial losses that would not be covered under Errors & Omissions (E&O) policies, such as securities claims. It also provides coverage for individual D&Os whereas the E&O policy would only cover the entity.
However, some policies will have exclusions to them and it’s important to find out exactly what each policy will and will not cover. Take a look at some of the common exclusions that may be involved:
These exclusions will often deal with fraud and disgorgement of profits, remuneration, or financial advantage to which the insured is not legally entitled.
For example, one important aspect to consider is whether or not coverage for defense of allegations costs will be covered throughout an entire settlement process. Some policies will refer to a “finding in fact” statement, which may limit the continuation of defense costs for a director who is proved to be innocent during a case.
This would mean that the costs would only be covered up to a certain period of time rather than for the entire duration of the case. Therefore, it’s important to make sure that a “final adjudication” approach is in place so that coverage continues until there is a final settlement.
Prior or Pending Litigation
This policy excludes claims that began or are pending prior to the “prior and pending litigation” date specified on the policy declarations.
- Could there be any litigation or situations that arise out of the same or essentially the same facts against you?
- If you changed from one insurer to another, was the prior/pending litigation date from the original policy used?
Pollution or Environmental Impairment liability coverage can be purchased as a separate policy.
Many insurers will now include some limited coverage which is written back into the policy as an exception to the pollution exclusion. Pollution coverage availability is generally limited to shareholder derivative actions, Side A claims, and defense costs for Canadian claims.
Some policies may offer broader coverage. Consider if your current policies will provide the broadest pollution coverage available, so that you can be protected with as few exclusions as possible.
Bodily Injury/Property Damage
Almost all D&O policies will have broad Bodily Injury/Property Damage (BI/PD) exclusions since the main intention of the D&O policy is to provide coverage for financial loss.
As such, BI/PD exposures are better addressed through the General Liability policy so that you ensure you don’t have BI/PD excluded from your insurance due to a lack of coverage from your D&O policies.
This list is not exhaustive and there are a variety of other insurance coverages that Directors and Officers of mining companies need in order to address all the risks they face and prevent losses. Download our free guidebook “Directors' and Officers' Liability Insurance Guide” here to find out how you can protect your company’s assets: