Directors and officers (D&O) liability insurance protects the personal assets of corporate directors and officers, and their spouses, in the event they are personally sued by employees, vendors, competitors, investors, customers, or other parties, for actual or alleged wrongful acts in managing a company.
The insurance, which usually protects the company as well, covers legal fees, settlements, and other costs. D&O insurance is the financial backing for a standard indemnification provision, which holds officers harmless for losses due to their role in the company. Many officers and directors will want a company to provide both indemnification and D&O insurance.
Possible claim scenarios include:
- Unfair Business Practices
- Breach of fiduciary duty
- Misrepresentation of company assets
- Misuse of company funds
- Failure to comply with workplace laws
- Theft of intellectual property
- Poaching of competitor’s customers
We have a client who was accused by a local TV investigator of not completely performing the task they were paid to do. The legal fees and the cost to maintain their reputation was well over $500k. Their D&O carrier paid these costs.
There are many times when a small or middle market company relies on this coverage to get them out of trouble. This coverage is not only for non-profits with boards or public entities Which is why it is great to work with a broker who understands the nuances of this type of coverage.
If you do not have this coverage and wonder how it would apply to your business, please reach out to us! We work with many of our clients to help write the coverage that will best fit their needs. We write a lot of it for our clients.You want to make sure you have a broker that understands the aspects of D&O coverage that are pertinent. We look forward to hearing from you!