Minimize Risk!

Lead In: Protect Your Company with Director & Officer Liability Insurance

With the corporate scandals in the late 90’s and early 00’s, directors and officers of public companies found themselves in an increasingly difficult environment.  Congress passed the Sarbanes-Oxley Act in 2002, which is designed to protect shareholders and improve corporate governance.  However, it also has the potential to bring an upswing in litigation against officers and directors.  This is where Director & Officer (D&O) Liability Insurance can help.

D&O Insurance is designed to protect directors and officers against personal liability and financial loss stemming from wrongful acts committed (or allegedly committed) in their role as a corporate officer or director.

These policies can cover claims made as a result of:
*Mergers, takeovers, and divestment
*Changes in control of shareholding
*Shareholder claims
*Trustee accountability
*Administrative liabilities
*Termination of employment

Whether the litigation is brought by shareholders, employees, customers, competitors, or other entities, D&O Liability Insurance basically transfers the risk to the insurance market.  It does not, however, protect directors and officers in the event of willful wrongdoing or deception.

As a result of rising claims, settlement costs, and increased shareholder activism, D&O coverage has evolved over the years.  What is best for one company may not cover all the needs for another.  Additionally, some situations may not be covered under a D&O policy, so it is always best to sit down with your insurance agent to discuss your company’s needs, discover your exposure, and find ways to minimize that risk.

*This article is for informational purposes only