Understanding what types of claims trigger D&O insurance helps NZ directors appreciate the breadth of their exposure. While specific case details have been anonymised, these scenarios reflect real claim types in the NZ market.
1. Shareholder Dispute — Family Business
Two equal shareholders in a family business fell into dispute. One shareholder alleged the other (also a director) had used company funds for personal expenses, breaching director duties. Legal costs exceeded $150,000 before settlement. D&O covered the director's defence.
2. FMA Investigation — Capital Raising
A startup founder was investigated by the Financial Markets Authority following complaints about information provided to angel investors. No charges were ultimately laid, but legal costs during the two-year investigation exceeded $200,000. D&O covered these costs in full.
3. Liquidation Claim — Insolvent Company
A company liquidator brought claims against three directors alleging reckless trading under the Companies Act. The claim alleged the directors continued trading while insolvent, causing $800,000 additional losses to creditors. D&O funded the directors' defence.
4. Employment Claim — Wrongful Dismissal
A CEO was personally named in an Employment Relations Authority claim by a senior manager who alleged the dismissal process was personally orchestrated by the CEO in bad faith. The management liability policy's employment practices section covered the CEO's legal costs.
5. WorkSafe Prosecution
Following a serious injury to a contractor on a construction site, WorkSafe prosecuted the company director personally for failing in their officer due diligence duties. Statutory liability insurance covered legal defence costs and a portion of the penalty.