How long after the policy ends can a D&O claim be notified?

For as long as the policy's extended reporting period (discovery period) allows, and in Latvian quotes that varies enormously – from a few dozen days to 12 months as a standard condition, with the option of extending it for longer for an additional premium, in practice up to 36 months. The benchmark against which to judge that figure is Section 169, paragraph five, of the Komerclikums: claims against a board member or a supervisory council member become time-barred within five years from the day the loss was caused. If the policy is renewed without a break and the continuity date is carried over, this question largely loses its importance.

When this answer applies to your situation

• The company is sold or control over it changes – in many policies that automatically switches the cover to run-off.
• A board member leaves office or the whole board is replaced.
• The company decides not to renew the D&O policy or changes insurer.
• The company ceases operations or is liquidated.

What can change the answer

• How long the default notification period is in the particular policy.
• Whether an extension is available, what the maximum term is and what it costs.
• Whether the period also applies to officers who have already left office – some wordings give them a separate, longer period.
• Whether the policy is renewed without a break and whether the continuity date is carried over.
• Whether the policy requires notification of circumstances as well, not just of claims already brought.

What to check in the policy or quote

• The length of the default notification period in the policy
• The option to extend, the maximum term and the price
• The change of control condition and run-off
• Cover for officers who have left office
• Whether notifying circumstances before a claim is allowed and how it is documented

The typical mistake

People start thinking about the notification period once the policy has already expired. By then it can no longer be bought – an extension can usually only be taken up at the moment the policy ends or shortly before. The other mistake is to think that an extension is cheap: in practice its price can be comparable to a whole annual premium, so it usually works out cheaper simply to keep the policy running.

Example

A situation typical in practice (generalised example, not a specific client)

A typical situation: a company is sold and the new owner takes out its own D&O policy with a new retroactive date. Six months later the former board member receives a claim about a decision taken before the deal. The new policy does not cover the past, the old one has expired, and if the notification period was a few dozen days it has already run out. This situation is solved by an extended period bought at the same time as the deal, not after it – and its length is chosen by looking at the five-year limitation period.

Related content

• Directors' and officers' liability insurance (D&O)

This is not individual insurance advice; actual cover always depends on the chosen insurer's wording and the special conditions of the policy.