Directors & officers (D&O) liability insurance protects the people who serve as directors or officers of a company from personal losses if the organization’s employees sue them, vendors, customers, or other parties. In addition, D&O insurance can cover defense costs, settlements, and additional costs associated with wrongful act allegations and lawsuits. Directors & officers insurance is essential to a corporate risk management strategy and can help your company attract and retain qualified executives and board members.

Directors and officers are sued for a variety of reasons related to their company roles, including:

A) Breach of fiduciary duty resulting in financial losses or bankruptcy

B) Misrepresentation of company assets

C) Misuse of company funds

D) Fraud

E) Failure to comply with workplace laws

F) Theft of intellectual property and poaching of competitor’s customers

G) Lack of corporate governance

Side A Coverage: Covers directors and officers for defense costs, settlement fees, or judgments if the company cannot indemnify them, such as if the company has declared bankruptcy.

Side B Coverage: Covers the company for directors’, officers’, and employees’ losses when the company does indemnify them.

Side C Coverage: Also called “entity coverage,” financially protects the corporation in its own right. Entity coverage may reduce the limits available to protect the individual officers and directors.

A) The need to obtain proper D&O insurance cannot be overstated. A common misconception is that alleged misconduct by directors or companies is covered under other liability policies, such as commercial general liability, errors, omissions, or different professional liability policies. In many cases, this is not true.

B) In some instances, misconduct may not fall within an organization’s indemnification clause.

C) Even if an organization can indemnify its directors and officers for the wrongdoing in question, it may not have the funds to finance the ongoing costs and expenses related to a lawsuit.

D) These costs can add up quickly and easily reach six figures.

E) Without the financial backing of a D&O insurance policy, an indemnification clause might not adequately protect the directors and officers of the organization.

Contact us today to keep pace with an increasingly complex risk landscape and find the best fit for D&O insurance coverage!