The Step-by-Step Guide to Claiming Directors & Officers Insurance

Onsurity Editorial
April 28, 2025
8 min read

Table of Contents

Directors & Officers Insurance (D&O Insurance) exists for one simple reason: leadership is a risky proposition. Every decision taken at the top can be scrutinised, challenged or even land company directors and key executives such as CMOs and CTOs in legal hot water.

In the real world, D&O insurance claims arise more often than most expect. Think shareholder lawsuits after a financial downturn, regulatory actions for alleged compliance failures or allegations of mismanagement by disgruntled stakeholders. Even a well-intentioned decision can spiral into litigation.

So, why is this guide crucial? When a D&O liability insurance claim hits, it doesn’t just threaten the company—it puts the personal assets and reputations of directors and other key executives on the line. Knowing how to file a D&O liability insurance claim properly isn’t just helpful; it’s essential.

This step-by-step guide will walk you through the entire insurance claim process, help avoid rejections and ensure smooth sailing even in choppy legal waters.

Let’s go up the ladder- one step at a time!

Step 1: Understanding Your Directors & Officers Insurance Policy

Before jumping into the insurance claim process, take a breath and read your policy. A solid understanding of what’s covered—and what’s not—is half the battle. Here’s a bird’s eye view-

What’s Covered

Defence costs: Legal fees for defending against claims.
Settlements: Agreed payouts to resolve disputes.
Regulatory investigations: Coverage for legal representation in inquiries.

What’s Not Covered

Intentional fraud
Criminal acts
Personal profit from misconduct

It’s also vital to understand the three key parts of Directors & Officers Insurance coverage:

Side A: Covers directors & officers personally when the company can’t indemnify them.
Side B: Reimburses the company when it indemnifies directors & officers.
Side C: Covers the company itself for securities claims (mainly public companies).

It is also vital for you to be aware of the important responsibilities of directors and other key executives outlined in your D&O insurance policy. Don’t fall for common misconceptions—just because your company might indemnify you don’t mean you are safe. Indemnity is not a guarantee, especially during insolvency or internal conflict.

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Step 2: Prompt Reporting of the D&O Liability Insurance Claim

Here’s where many go wrong: delayed notification.

Most Directors & Officers Insurance policies in India operate on a claims-made basis. This means the liability coverage claim must be made and reported within the policy period (or extended reporting period, if applicable). As soon as you become aware of a liability coverage claim—or even a potential one—you must inform your insurer.

Examples include:

Receiving a legal notice
Being named in a lawsuit
Getting summoned by a regulator

How to Notify

Contact your D&O insurance provider directly or through your insurance broker.
Keep the email or written communication on record.
Attach any legal or regulatory documents related to the D&O liability insurance claim.

Late notifications often lead to denied coverage or reduced payouts. Avoid this mistake at all costs!

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Step 3: Involve Legal Counsel Early

Legal experts aren’t optional—they are a must-have from day one. Engage internal or external counsel as soon as a D&O liability insurance claim is suspected. They will:

Interpret the D&O insurance policy in light of the current situation
Communicate with the insurer to ensure the coverage is triggered properly
Prevent premature statements that could harm your defence

Having your legal team align the early defence strategy with policy provisions will save you from compliance traps and unintentional errors. They will also help you avoid statements or actions that may jeopardise your defence.

Step 4: Gather and Preserve All Documentation

Documentation is your shield—and possibly your sword. Start collecting every shred of relevant data (including, but are not limited to):

Board meeting minutes
Emails and memos
Investor communications
Legal/ regulatory notices or letters

Also, build a clear timeline of events: when the incident occurred, when it was discovered and the steps taken afterwards. Create a secure digital folder (preferably encrypted) and a physical binder if needed. Make sure legal privilege is maintained wherever it applies.

Step 5: Fill Out Claim Forms Accurately

Filing the actual D&O liability insurance claim is a meticulous process. Treat it like a sworn statement.

What a Directors & Officers Insurance Claim Form Typically Includes:

Policyholder’s details
Description of the wrongful act
Names of the concerned Directors & Officers (such as CMOs and CTOs)
Timeline of events
Requested documents

Be crystal clear on the nature of the allegation. Avoid ambiguous language. Double-check all names, dates and references.

Common Mistakes You Should Avoid

Leaving out crucial dates
Skipping related documents
Vague summaries
Failing to identify the impacted individual or role

A sloppy form can slow down or even derail your D&O liability insurance claim. Precision is everything.

Step 6: Submit Supporting Materials with the D&O Liability Insurance Claim

A Directors & Officers Insurance claim form without documents is like a car without fuel—it won’t go far.

What to Include

Legal notices or court summons
Contracts or service agreements in question
Email threads or internal memos
Board resolutions or decisions

Make sure the entire package is organised and complete before submission. If you leave out something, the insurer will come back with questions. This can delay the insurance claim process and can also increase scrutiny.

Step 7: Cooperate with the Insurer’s Investigation

Once the Directors & Officers Insurance claim is filed, the insurer kicks into action.

Here’s what typically happens

A claims handler or panel counsel is assigned for the settlement of claims.
The insurer might ask for additional evidence or clarification.
You might be interviewed, either formally or informally, anytime during the claim settlement process.

When handling interviews or queries from the insurer’s investigating team, always be truthful, clear and cooperative. Avoid making speculative or emotional statements—stick to facts and documented timelines. It’s wise to have legal counsel present to ensure your responses align with the D&O insurance policy terms. Maintain a professional tone and keep records of all interactions.

Do’s and Don’t of Interacting with the Insurer’s Representatives

Be transparent and prompt with responses.
Keep a record of all communications.
Don’t speculate or guess answers.
Don’t make public statements without legal clearance.

Insurers appreciate cooperation. The smoother this phase, the faster the resolution.

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Step 8: Evaluate and Negotiate Settlement Offers

Most directors & officers insurance claims don’t end in dramatic court showdowns—they are settled.

Settlements can be

Negotiated directly between the parties
Mediated with legal advisors or court-appointed officials

Never accept the first offer blindly. Bring your counsel into the loop. Assess:

Whether the amount adequately reflects the damages
If there are any ‘admission-of-liability’ implications
How it can impact future premiums or renewals

Remember, reputational damage can often be worse than financial loss.

Step 9: Carefully Review Agreements of Settlement of Claims

Settlement agreements are legal minefields. Walk carefully.

Focus Areas

Indemnity clauses: Who is protected from future Directors & Officers Insurance claims?
Admission of liability: Is guilt implied or denied?
Confidentiality provisions: Can you talk about the case?
Payment responsibilities: Who pays what, and when?

Let your legal counsel review every word. A vague clause today could cost you dearly tomorrow.

Step 10: Post-Settlement Risk Management

A D&O liability insurance claim is never “just over.” It’s a wake-up call.

Focus Areas

Use this moment to:

Debrief: What went wrong? Where did the lapses happen?
Update protocols: Revise your internal governance, decision-making, and compliance structures.
Train your board: Conduct workshops on risk awareness and fiduciary duties.
Communicate smartly: If needed, issue a clear statement to stakeholders addressing the issue transparently without oversharing.

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Conclusion

Let’s recap the key steps discussed:

Act fast – report the D&O liability insurance claim promptly
Document everything – don’t rely on memory
Involve experts – legal counsel is your ally
Cooperate fully – build trust with the insurer

Directors & Officers Insurance claims are high-stakes and high-pressure. But with the right approach, you can protect your people, your company and your peace of mind. When leaders know the drill, they lead with confidence. Confidence, backed by compliance, is the best kind of protection.

Ready to Review Your Directors & Officers Insurance Policy?

If you are not sure where your policy stands—or need help streamlining your insurance claim process – get in touch with Onsurity Plus today. Do speak with our seasoned advisors for comprehensive insurance coverage and have absolute peace of mind!

FAQs

1. What exactly qualifies as a D&O claim?

A D&O (Directors & Officers) claim typically arises when directors or officers are accused of wrongful acts committed in their managerial capacity. This includes allegations like breach of fiduciary duty, mismanagement, regulatory non-compliance or misleading statements to stakeholders. Claims can be brought by shareholders, employees, creditors, regulators or even competitors. The claim must allege personal liability for decisions or actions taken while performing official duties.

2. Can I report a potential claim even if no lawsuit has been filed?

Yes, you can and should report a potential D&O insurance claim even if no lawsuit has been filed yet. Most D&O policies in India are claims-made and they often include provisions for reporting circumstances that may lead to a claim. Early notification helps preserve your rights under the policy and ensures coverage if a claim arises later. Delaying could risk denial of coverage.

3. What happens if I don’t report within the policy period?

If you don’t report your D&O insurance claim within the policy period, your insurer may deny coverage entirely. Since most D&O policies in India are claims-made, timely reporting is critical for the claim to be valid. Even if the claim is legitimate, missing the deadline can lead to loss of financial protection. Always report claims or potential issues as soon as possible.

4. Will hiring my own lawyer affect the claim?

Hiring your own lawyer can affect your D&O insurance claim, depending on the policy terms. Some insurers may require the use of panel counsel (pre-approved lawyers), while others may allow your choice with prior consent. If you proceed without informing the insurer, they may refuse to cover legal costs. Always coordinate with the insurer before appointing independent legal counsel.

5. Does the policy cover fines or penalties?

In most cases, D&O insurance policies in India do not cover fines or penalties, especially if they are criminal or punitive in nature. These are typically excluded as they arise from illegal or intentional misconduct. However, some policies may cover certain regulatory or civil penalties, depending on local laws and the insurer’s terms. Always check your policy wording for specific exclusions.

6. Is coverage available for past directors or board members?

Yes, D&O insurance coverage is usually available for past directors or board members, as long as the claim relates to actions taken during their tenure. The key is that the claim must be made and reported within the policy’s active period or any extended reporting period. Many policies explicitly include former directors to ensure continued protection even after they leave the company. Always confirm this in your policy terms.

7. How long does the claims process take?

The D&O insurance claims process can take anywhere from a few weeks to several months, depending on the complexity of the case and the responsiveness of all parties involved. Simple claims with clear documentation may be resolved quickly, while legal disputes or regulatory investigations can extend the timeline. Timely reporting, accurate paperwork and active cooperation with the insurer help speed up the process.

8. Will this affect our future D&O policy premium?

Filing D&O insurance claims may or may not impact your future premiums. Insurers may view frequent or high-value claims as a higher risk, which can lead to increased premiums or stricter policy terms at renewal. However, a well-handled claim with proper governance and risk management in place can help mitigate negative effects. Transparency and improved compliance measures also reassure insurers.

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