Directors and Officers (D&O) insurance for mining operators is important, as directors and officers of mining operators face exposure to criminal, civil, and regulatory risks.
Ongoing environmental risks pose a particular exposure for mining company executives. For example, they may be subject to both civil, regulatory, and criminal proceedings in the event of a claim alleging a wrongful act following bodily injury, death, and/or destruction of property resulting from disasters caused by either tailings or overburden.
D&O insurance, if structured properly, can provide robust protection in the event of follow-on claims or regulatory investigation; it does not, however, cover direct claims for cleanup costs, bodily injury, or property damage — these perils are covered under other insurances.
Carefully consider exclusionary language in D&O insurance. The breadth of terminology in some policies can mean that follow-on claims can be excluded as well as the direct claims (that would fall for cover under other insurances). The terminology can be minimised by limiting use or removing it, applying carve backs, or including of “for” language where appropriate.
Other policy language which might impact the ability to obtain full recovery in environmentally related D&O claims, if not removed or substantively reworked, includes:
- “Insured” versus “insured exclusion”.
- Other insurance clauses, particularly relevant where there are joint ventures and/or local policies.
- Specific matters exclusion.
- Tailings dam exclusion.
While there is the ability to tailor coverage to remove or limit the potential impact and application of such exclusions, terms, and conditions, the breadth of coverage available in relation to each individual risk will be dependent on multiple factors, including: the current market environment, recent claims activity within the industry, the individual company risk exposure, and individual insurer appetite.
The structure of the insurance program can potentially impact the availability of an indemnity for senior executives involved in follow-on claims or regulatory investigations. The total program limit and the availability of ring-fenced coverage for senior executives where the company cannot indemnify them or where the underlying insurance does not respond should also be carefully considered.
