The economic consequences derived from the Covid-19 crisis are causing the fear in the business sector due to the possible responsibilities of Directors and Administrators. Business decapitalization or insolvency are the main fear of entrepreneurs, due to the consequences that this may have against their assets. This values the Directors and Officers Liability Insurance (D&O), as an instrument to get out of this crisis reinforced and with adequate protection.
However, it should be noted that the administrators will not be liable for the debts that the company would have contracted during the state of alarm in the event of decapitalization. In addition, insolvent companies are not required to file for bankruptcy protection during the state of alarm.
Why take out Directors and Directors Liability insurance now?
The assets of managers and directors of companies will now be more exposed than ever to possible claims that tend to rebound in each crisis. Operational problems of companies, labor disputes, insolvencies or bankruptcies of companies, often lead to legal claims that can go both against the legal entity and against natural persons. The importance of D&O insurance is that protect the assets of administrators and directors against third party claims.
Is the employer responsible for the contagion of its employees in the workplace?
In addition to the economic problems that can give rise to claims of all kinds, we can find claims for contagion of workers in the workplace. At the beginning of the health crisis due to Covid-19, there was already conflict between unions and companies over precautionary measures against contagion in the workplace. It is impossible for the company to completely eliminate the risk of contagion in the workplace, so there may be claims for contagion from workers, including customers and suppliers.
It is too early to tell how insurers on directors' and officers' liability insurance coverage will respond to these claims, due to the complexity of these types of claims. In general, these policies, in addition to covering legal defense expenses, could in some cases offer coverage to indemnify civil liability against third parties for not having taken the protection and hygiene measures dictated by the health authorities.
If you already have a D&O policy, it is very likely that the premium will increase by at least 20% at the next renewal. This is due to the increase in claims expected by the insurance sector, as a result of claims as a result of the economic problems that a large part of the business sector will suffer. At Canarisk we are willing to advise you and check that your policy suits your needs. If you haven't contracted it yet, you can now calculate your Directors and Directors Liability insurance.
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