D&O insurance may be concluded in two ways:
- as insurance for an individual person where the insurance buyer is a natural person who as a rule pays the premium; and
- as corporate insurance where the insurance buyer is a company which also pays the premiums.
Individual insurance covers damage claims made by third parties or, under somewhat more stringent conditions, by the company, but does not cover damage claims against the company, but only against an individual member who took out the insurance. Claims against a company are covered by corporate insurance. In corporate insurance, the insurance buyer is a company and all managers at the company are insured (mostly the current members of governing and supervisory bodies, but sometimes also members of bodies at subsidiaries; however, that needs to be checked in the applicable general terms and conditions) along with the company. That means that such a policy in principle also covers damages arising from claims that might, for instance, be made against the company by shareholders. An important difference between the two lies in the amount of cover. In individual insurance, the limit is intended only for the insured person and is not distributed to other insured persons, but to one person only. In corporate insurance, however, the cover is distributed between all other insured persons.
In relation to the tax treatment of premiums for the insurance of liability of management and supervisory board members, the Tax Administration of the Republic of Slovenia and the Ministry of Finance issued two explanations. In May 2011, a new explanation was published by the Tax Administration which, however, brought nothing new, since premium payments made by a company for such insurance products are still considered in terms of tax as a benefit. After the amendment of Article 263 of the Companies Act, the tax treatment for directors’ and officers’ liability insurance remains unchanged (28 January 2016):
(*only in Slovene language)