Directors' and officers' liability insurance through Chubb
A director is not held liable as an office holder but as a person: the claim goes to his own assets. This policy stands between that claim and your savings account.
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In brief
Finass acts as an intermediary for, among others, Chubb's business range. We are not tied to any insurer and set several insurers objectively side by side; which party writes the policy follows from your legal form, your size and your acceptance profile. The general structure of this product is set out on the hub page on directors' and officers' liability.
The claim can come from three directions. From inside, the legal entity itself claims that you performed your duties improperly, under Article 2:9 of the Dutch Civil Code. From outside, a supplier, financier or contracting party holds you personally liable through Article 6:162 of the Dutch Civil Code, for example because you entered into obligations while you knew the company would not meet them. And after a bankruptcy the insolvency administrator arrives, relying on Article 2:248 of the Dutch Civil Code for a private limited company or Article 2:138 of the Dutch Civil Code for a public limited company.
That last route is the most dangerous, because the burden of proof is reversed. If the accounting obligation in Article 2:10 of the Dutch Civil Code or the publication obligation in Article 2:394 DCC has been breached, it is established that the board performed its duties improperly and this is presumed to have been an important cause of the bankruptcy. Annual accounts filed late are therefore not administrative sloppiness but a procedural problem. The same applies to failing to notify inability to pay to the Belastingdienst and the industry-wide pension fund under Article 36 of the Dutch Tax Collection Act.
This page deals with one situation. The full overview is on Directors' and officers' liability in a VvE.
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Directors' and officers' liability insurance
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Get coveredWhy arrange it through Finass Verzekert?
We look at the terms as well as the premium, and stay your point of contact when there is a claim.
Independent
We are not tied to one insurer and compare on the basis of an objective analysis of several companies.
One fixed adviser
You call or email someone who knows your file. No menu options, no changing call centres.
Switching without hassle
We cancel your old policy and align the start date, so you are never a day without cover.
Help with claims
We report the claim and monitor how it is handled. In urgent cases you can reach us on the emergency line.
What to look out for
Four provisions that determine whether this policy does anything when a real claim arises.
Claims-made: the moment of the claim counts
This cover almost always works on a claims-madebasis. What is decisive is not the year of your decision, but the year in which the claim reaches you and is notified. A mistake from an earlier year is only covered if retroactive cover has been included. If the policy ends, without run-off cover there is nothing left, while the limitation period still runs for years.
Resigning does not end your liability
Anyone who lays down his office remains answerable for the period in which he was a director. At the end of your term or on the sale of the business, arrange a run-off period for former directors. Also check whether former directors, supervisory board members, de facto policymakers and the heirs of a deceased director belong to the group of insured persons.
Personal gain and intent
Excluded is a claim in which you obtained a benefit to which you were not entitled, and damage caused by intent or wilfully reckless conduct; the latter also follows from Article 7:952 of the Dutch Civil Code. Defence costs are usually advanced and only reclaimed if intent or fraud is established in court. Read how that recovery provision is worded.
Fines, injury and property damage fall outside it
Administrative fines and penalty payments are a punishment and not compensation; they stay outside the cover. Injury and damaged property belong on the public and employers' liability insurance, not here. Claims arising from circumstances you already knew about when taking out the insurance are also excluded.
What does your premium depend on?
- Legal form and governance: a BV, NV, foundation, association or cooperative each weigh differently
- Balance sheet total and turnover: the usual measure of the size of the risk
- Number of directors and supervisory board members: the group of insured persons determines the exposure
- Establishments abroad: activities in the United States and Canada are assessed separately
- Financing structure: outside investors and bondholders increase the number of possible claimants
- Retroactive and run-off periods: the further back and the longer forward, the higher the premium
Insurers weigh these details differently. That is where your saving is.
What is covered
| Situation | Directors' and officers' liability | Public and employers' liability |
|---|---|---|
| The insolvency administrator complains that the board filed the annual accounts months after the deadline | Yes | No |
| A shareholder claims that you completed an acquisition at far too high a price | Yes | No |
| The volunteer treasurer of your foundation is held liable for a shortfall that has arisen | Yes | No |
| A claim from your US subsidiary against the Dutch board | Provided that | No |
| A visitor breaks his ankle on the stairs of your office | No | Yes |
| An administrative fine from the labour inspectorate after a serious workplace accident | No | No |
The two policies do not exclude each other: with a single event, one can deal with the injury and the other with the complaint against the director.
Frequently asked questions
This is what people ask us most.
Who pays if the legal entity has already indemnified me?
Many articles of association or employment terms contain an indemnity from the legal entity to the director. That indemnity is worth exactly as much as that entity's assets, and in a bankruptcy that is nothing. What is more, an indemnity does not apply against the insolvency administrator who pursues the board on behalf of the creditors as a whole. The insurance absorbs what the indemnity does not cover.
Is a fellow director's mistake my problem too?
In principle it is. Directors are jointly and severally liable for improper management, even where duties were divided internally. You can exonerate yourself by showing that the failure is not attributable to you and that you were not negligent in taking measures. A recorded vote against and demonstrable intervention are the route for that.
When do I have to report a claim that is looming?
As soon as you are reasonably aware of a circumstance that may lead to a claim. Article 7:941 of the Dutch Civil Code requires you to inform the insurer in good time. With a claims-made policy it is also the only way to attach a circumstance to the current insurance year. If you only report it after the end date, the cover may have expired.
Do a foundation and an association need this policy too?
Yes. Directors of foundations and associations carry the same standard of proper performance of duties under Article 2:9 of the Dutch Civil Code, and in a bankruptcy the insolvency administrator can take the same route through Articles 2:50a and 2:300a DCC. Unpaid and volunteer directors are not excepted from this; serving unpaid does not mean serving without liability.
Every situation is different. For these situations we have a separate page.
- Compare directors' and officers' liability insuranceThe main page
- Directors' and officers' liability insurance for your companyArticle 2:9 of the Dutch Civil Code, personal liability, defence costs
- Directors' and officers' liability in property and real estateArticle 2:9 of the Dutch Civil Code, private assets, claims-made
- Directors' and officers' liability insurance through Hienfeld
- Directors' and officers' liability insurance for property and real estatePersonal liability, Article 2:248 of the Dutch Civil Code, defence costs