Directors & Officers Liability Insurance

Whether you lead a professional firm, a public or private company, or a nonprofit organization, Directors & Officers  Liability Insurance (D&O) is essential for protecting your leadership team and the outside directors who help guide your organization.

D&O protects an organization's outside directors and officers from alleged wrongful acts, safeguarding their personal assets when they are sued by employees, vendors, investors, or regulators for errors or omissions such as:

• Breach of fiduciary duty. Claims from shareholders alleging mismanagement that resulted in financial losses or bankruptcy.
• Securities claims. Lawsuits filed by shareholders of public companies regarding misrepresentation in financial disclosures that adversely affect the stock price.
• Employee litigation. Claimks alleging wrongful termination, harassment, discriminatory policies or practices, or failure to comply with workplace laws.
• Creditor or competitor claims. Lawsuits from competitors, creditors or vendors alleging misuse of company funds, theft of intellectual property or anti-competitive behavior.
• Regulatory actions. Investiagtions by governmental agencies that result in litigation, fines or other sanctions.

D&O insurance covers defense costs, settlements or judgments, and other expenses arising from lawsuits or regulatory investiagtions. The coverage shields the personal assets of directors and officers when the company cannot or will not indemnify them, especially in cases of insolvency. This protection extends to a director or officer's spouse or domestic partner, or in the case of a deceased director or officer, to his or her estate.

D&O coverage is generally divided into three parts, called sides:

• Side A: Individual Coverage, which protects individual directors and officers when the company cannot legally or financially pay for their defense costs, judgments or settlements, such as during bankruptcy.
• Side B: Corporate Reimbursement, which repays the company for the cost of defending a director or officer or paying the judgment or settlement levied against a director or officer.
• Side C: Entity Coverage. This applies when a company itself is named as a defendent in a lawsuit, protecting the corporate balance sheet.

D&O insurance does not protect against claims resulting from deliberate fraudulent or criminal activity, illegal personal profit, or intentionally wrongful acts or willful violations of the law. Claims brought by on director or officer against another from the same company also are generally excluded.

ProDefender's experienced agents can identify the appropriate D&O protection for your organization, advise on Side A coverage levels and other coverage options, and evaluate the latent exposures that can exist with subsidiary, partnership, franchise, or venture capital structures; advisory boards, ad hoc committees and the like; and local, state, or regional affiliates or chapters.

Failure to provide D&O protection can impact an organization's ability to recruit and retain high-caliber leadership.