Directors and Officers (D&O) insurance provides financial protection for directors and officers of a company, as well as the organization itself, in the event they are sued for alleged wrongful acts while performing their duties. These policies typically cover legal fees, settlements, and judgments that arise from claims related to decisions made by directors and officers in their roles, such as breaches of fiduciary duty, mismanagement, errors in judgment, and other alleged wrongful acts. D&O insurance helps attract and retain talented individuals to serve on a company's board of directors or in executive positions by providing them with a layer of financial protection against personal liability. In a director and officer insurance policy, there are three sides to the form. Side A, Side B, and Side C which provide different coverage from one another.
1. Side A coverage: This part of the policy protects individual directors and officers when the company cannot indemnify them. Side A can cover claims made directly against the individuals for alleged wrongful acts committed while acting in their capacity as directors or officers.
2. Side B coverage: Side B coverage reimburses the company for the expenses it incurs when it indemnifies its directors and officers. This can include legal fees, settlements, and judgments.
3. Side C coverage: Side C coverage, also known as entity coverage, protects the company itself for securities claims made against it. This typically includes coverage for shareholder lawsuits alleging securities fraud or other violations. These coverage components work together to provide comprehensive protection for both individuals serving as directors and officers and the company itself.
What are some of the indicators for purchasing Directors & Officers?
- Access to capital
- Exponential growth
- Retaining qualified board members
- protecting intellectual property assets
- Online growth
- Keeping pace with the everchanging technology and AI.
What are the sources of Directors and Officers claims?
- Mergers and acquisitions
- Bankruptcy
- Stock
- Conflict of interest
- Financial reporting
- D&O members compensation
- Non-disclosing of important information
This list goes on to director and officer claims by customers, clients and consumer groups. Examples such as debt collection, dishonesty, cost/quality of product or service and much more.
Third party claims against Directors and Officers insurance such as anti-trust, competitor disputes, tax issues, company defamation, anti-trust and more.
This coverage can be complicated and misunderstood yet holds so much value for a company. To learn more about Directors and Officers insurance for your business, please contact me today.