Directors and managers can be held personally liable for their decisions. What is D&O insurance for, and what does it cover?
In Switzerland, board members, managers and directors of a company can be held personally liable if they breach their duties. The risk also exists in small structures, particularly in the event of bankruptcy, a dispute between partners or an inspection by the authorities.
Who can take action against a director?
- The company itself or its partners and shareholders.
- Creditors, in case of financial difficulties.
- Authorities, for example in tax or social insurance matters.
- Employees or business partners.
What a D&O policy generally provides
The insurance pays defence costs – often the heaviest item – and, depending on the terms, compensation due when liability is established. It does not normally cover intentional acts.
Questions to ask before taking out cover
- What is the sum insured, and is it shared among several people?
- Does the cover apply to past events (retroactive date)?
- What happens after a departure or if the business is sold?
- What are the exclusions and disclosure obligations?
A contract review by an independent broker helps check that the cover really matches your structure and your responsibilities.
The information on this page is general in nature and does not replace personalised advice.