Do your insurance policies cover the incident?

Confirm what insurance cover your company holds. Will it cover some or all of the losses/costs your organisation and/or its directors and officers might incur as a result of the incident?

A number of different insurance policies may be relevant, depending on your company’s business and the nature of the incident. These might include:

  • directors and officers (D&O) insurance – this provides cover for claims against a company’s directors and officers and other specified individuals working for the company or its subsidiaries (sometimes including normal employees), and the costs of defending those claims. Individuals will typically be covered only where they are not indemnified by the company. If they are indemnified, the policy will usually let the company recover sums paid to directors and officers under the indemnity. The interaction between the company indemnity and the D&O policy varies and should always be checked
  • professional indemnity (PI) / errors and omissions (E&O) insurance – this provides cover for claims made in respect of breaches of duty in the conduct of a company’s business
  • property insurance – this provides cover against risks to property (eg fire, theft and weather damage, as well as, in some cases, terrorist risks). If the property is held under a lease, typically (for commercial premises) the landlord will insure, recovering the cost from the tenant and being responsible for reinstating the building in the event of damage. The landlord will usually also take out loss of rent insurance for a fixed period. Protecting the landlord’s income if the premises cannot be occupied and rent is suspended, this is a type of business interruption insurance (see below) for both parties
  • pollution insurance – this provides cover against costs arising from pollution
  • employers’ liability insurance – this provides cover against claims made by employees for death, injury or disease resulting from working conditions or practices
  • legal expenses insurance – this provides cover against the cost of bringing or defending legal claims
  • business interruption (BI) insurance – this provides cover against loss of profits and continuing fixed expenses resulting from the cessation or reduction of a company’s business
  • public liability insurance – this protects a property owner or occupier against claims resulting from injury to third parties on the premises
  • product recall costs insurance – this is intended to cover the costs of carrying out a product recall. It may be available as standalone cover or as an extension to an "all risks" policy

You should check the terms and conditions of the relevant insurance policies carefully and seek advice from your insurance broker and/or legal adviser if any of the policy wording is unclear. The nature and scope of insurance cover, and the level of excess/deductibles, can vary significantly between policies that provide the same type of cover. Individual policies may contain particular exclusions or extensions that are relevant to the incident. 

Law governing insurance policy

You should also check the law that governs the relevant insurance policies. Global insurance policies are often governed by English law. The information in this insurance section therefore reflects English insurance law and practice. However, your organisation may have bought insurance policies governed by the law of another jurisdiction.