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D&O is an abbreviation for Director and Officer, which is also commonly used in German. In German, this insurance is also referred to as property liability insurance for company managers. D&O insurance insures the personal liability risk of board members of a corporation. It covers pecuniary loss arising from a culpable breach of duty in the course of its activities as a member of a governing body. In some cases, D&O insurance also applies to senior executives of legal entities.

Members of the management board, supervisory board and managing directors of corporations are liable without limitation and with their personal private assets for damages in the event of a culpable breach of duty. Such liability may exist both in the internal relationship with the company itself and in the external relationship with third parties. A D&O insurance offers protection against a claim for damages.

What damages are covered by D&O insurance?

D&O insurance comprises the judicial and extrajudicial defence against unfounded liability claims (defence function) and the indemnification of justified claims (compensation function). As a rule, this only applies to claims for pecuniary loss. Property damage and personal injury are excluded from insurance cover.

Who takes out D&O insurance?

D&O insurance is taken out by companies for their management. The policyholder is the company. The company is thus the insurer’s contractual partner. However, only the board members and not the company itself are insured. This constellation is called insurance for third party account (§§ 43 ff. VVG).

Is a D&O necessary if professional liability insurance already exists?

Although professional liability insurance also covers financial losses, such losses are excluded in the case of professional liability insurance which arise in the exercise of activities as a manager, member of the Executive Board or Supervisory Board. Therefore, despite the existence of a professional liability insurance, a D&O insurance should additionally be taken out for the company management.

What do I have to look out for as a member of the supervisory board, board of directors or managing director?

First of all, it must be ensured that the company has taken out D&O insurance at all. Graduation is voluntary. However, even if such insurance exists, not all cases of breach of duty are covered. As a rule, cases of wilful damage or breach of duty and wilful breach of duty are excluded from insurance cover.

In addition, any deductible on the part of the insured person, i.e. the member of the governing body, must be taken into account.


Lawyer Dr. Tristan Wegner

Your consultant

ABC-Straße 21
20354 Hamburg
T +49 (0) 40 / 36 96 15 0
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