The Legal 500

Twitter Logo Youtube Circle Icon LinkedIn Icon

GRP Rainer LLP

Work +49 221 272 27 50
Fax +49 221 272 27 52 4
Berlin, Bonn, Cologne, Dusseldorf, Frankfurt, Hamburg and 3 more

Show all Press releases

GRP Rainer Rechtsanwälte – Report on D&O insurance

August 2018

In cases where damage or injury has occurred, it is increasingly common for the issue of D&O liability to take centre stage. For this reason, many companies have taken out a D&O insurance policy for their managers.

Besides a great deal of responsibility, a company’s governing bodies also bear a high risk of personal liability. Mere negligence can be sufficient to give rise to both internal as well as external liability on the part of boards of directors, supervisory boards or managing directors. To reduce their managers’ risk of personal liability, a lot of companies therefore decide to take out a D&O (directors and officers) insurance policy for their governing bodies and executive employees. According to a report by the commercial law firm GRP Rainer Rechtsanwälte, D&O insurance should always be tailored to the individual risks faced by managers to ensure that the coverage actually kicks in.

A common point of contention here is when the governing bodies cede their right of indemnity vis-à-vis the D&O insurer directly to the company. What has often happened in these cases is that the insurance company has not wanted to stand good. They argue that the companies do not intend to make a serious claim on their governing bodies but instead are only after the insured sum.

On this issue, the Bundesgerichtshof (BGH), Germany’s Federal Supreme Court, has bolstered the rights of policyholders substantially with two ground-breaking judgments (Az.: IV ZR 304/13 and IV ZR 51/14). In doing so, the BGH established that the seriousness with which a claim is brought is not a prerequisite for coverage kicking in if an insured eventuality occurs. Instead, the decisive factor was said to be the manger making the claim in written form. Moreover, the Court held that it is acceptable for the governing bodies to assign their right of indemnity to the company that makes a claim against them. Accordingly, ceding the right of indemnity to the aggrieved company did not constitute conduct amounting to a violation of contract. The aggrieved company can thus directly assert its claims against the D&O insurer.

When taking out a D&O insurance policy, one should therefore always make sure that the managers’ individual liability risks are optimally covered. A key issue here is ensuring coverage of the risk of both internal and external liability on the part of governing bodies. Other essential factors include, e.g. the extent of the insured sum as well as the issues of retroactive coverage and cover for follow-up liability.

Lawyers who are experienced in the field of company law can offer advice when taking out D&O insurance and enforce claims against the insurer.

Click here for more information.

Legal Developments by:
GRP Rainer LLP

Legal Developments in Germany

Legal Developments and updates from the leading lawyers in each jurisdiction. To contribute, send an email request to
  • LAG Düsseldorf: Dismissal with immediate effect valid in response to threat

    Anyone who seriously threatens their employer or superior should expect to be dismissed with immediate effect. This was confirmed by a ruling of the Landesarbeitsgericht (LAG) Düsseldorf [Regional Labour Court of Düsseldorf] from June 8, 2017 (Az.: 11 Sa 823/16).
  • Tax evasion: Only voluntary disclosure affords protection from severe penalties

    Anyone who has been caught for tax evasion should expect to be faced with severe penalties. Voluntary disclosure is the only way of returning to a state of normal tax affairs and avoiding penalties.
  • GSK Update: AIFM Marketing in Germany - The clock is ticking for U.S. and other non-EU fund managers

    Our GSK Update informs about the impact of recent German investment fund legislation (UCITS V Implementation Act) for AIF managers, who are not domiciled in the EU (“non-EU-AIFM”) and who seek to market AIF shares in Germany in accordance with applicable German investment fund law under the EU-AIFM Directive (2011/61/EU).
  • GSK expands Luxembourg presence with a new tax partner

    Opened at the beginning of March 2016, GSK Stockmann + Kollegen continues to expand its Luxembourg office. Mathilde Ostertag recently joined the Luxembourg team of Equity Partners Dr. Marcus Peter, Andreas Heinzmann and Dr. Philipp Mößner as Local Tax Partner.
  • EIA - Strengthening the role of the public

    Among other things, the recent amendment to the Environmental Impact Assessment Act has broadened the rights of (what is termed) the "affected public". The affected public consists primarily of various citizens' initiatives pursuing environmental or public-health purposes. It may for instance file an appeal against a negative decision at the screening stage (i.e., a decision according to which the given project does not require the issuance of an EIA report), and seek its annulment in court. The affected public has been granted a stronger voice also in subsequent procedures in which the fate of a building project is being decided: zoning proceedings and the proceedings on the issuance of a building permit. Taken together, these legislative changes may make it more difficult to implement projects which require an EIA report; in particular, the length of permission proceedings may be substantially extended.
  • New Top Level Domains – Noerr expert warns against trademark infringements

    On June 13, the Internet Corporation for Assigned Names and Numbers (ICANN) published the names of those who have applied for a new top level domain the ending of which may be geographic, such as "munich", industry identification such as "insurance" and even all trademark names and company descriptions such as "canon" and "adidas".
    - Noerr
  • No obligation to set up filtering systems in order to prevent copyright violations

    ECJ, decision of February 16th, 2012, ref. C-360/10 – SABAM
  • Further ECJ Ruling concerning NGO’s right of action under German environmental law

    For the second time within a short period of time, the non-governmental organisations right to challenge administrative decisions under German law is going to be subject to the jurisdiction of the European Court of Justice (ECJ). In January 2012, the German Supreme Administrative Court (Bundesverwaltungsgericht) referred a case to the ECJ for a preliminary ruling concerning the NGO’s right of action.
  • Lessons in Cross-Border M & A Transactions

    The fundamental advice for international business transactions is obvious and easy to understand: different countries have different laws, business habits and cultures. These differences may range from minor nuances, such as lengthy French business lunches or unusual Spanish office hours, to significant legal roadblocks, such as strict European employment laws.
  • Priority rental rights in insolvency

    Parties to rental contracts for commercial premises often agree priority rental rights. In practice, this concept is used to cover a whole series of legal structures. These range from fixed options for the tenant to a promise made by the landlord as a business policy that if any additional premises become available, they will be offered to the tenant. In 2010 the Berlin Court of Appeal issued a ruling on such priority rental rights in insolvency; the decision has recently been published.